MonitorsPublished on Jul 01, 2022
Energy News Monitor | Volume XVIII, Issue 51

Quick Notes

India’s Battery Swapping Policy: Too much expected from too little?


In April 2022, Niti Aayog, the in-house think tank of the Indian government, released a draft policy for battery swapping (BS) for two and three-wheelers. The vision of the policy as stated in the draft is to catalyse the adoption of electric vehicles (EVs) by improving the efficient and effective use of scarce resources such as public funds, land, and raw materials for advanced cell batteries for the delivery of customer-centric services. The policy goals are to (1) promote swapping of batteries with advanced chemistry cell (ACC) batteries to decouple battery costs from the upfront costs of purchasing EVs, thereby driving EV adoption (2) offer flexibility to EV users by promoting the development of battery swapping as an alternative to charging facilities (3) establish principles behind technical standards that would enable the interoperability of components within a battery swapping ecosystem, without hindering market-led innovation (4) leverage policy and regulatory levers to de-risk the battery swapping ecosystem, to unlock access to competitive financing (5) encourage partnerships amongst battery providers, battery (original equipment manufacturers (OEMs) and other relevant partners such insurance/financing, thereby encouraging the formation of ecosystems capable of delivering integrated services to end-users (6) promote better lifecycle management of batteries, including maximizing the use of batteries during their usable lifetime, and end of life battery recycling.

The provisions in the draft policy address some of the challenges specific to the battery and EV industry. However, the draft presumes the success of BS which in turn is expected to resolve larger issues at the other end of the value chain such as domestic manufacture of ACC batteries and production of EVs. It also expects BS which is only a small part of the EV ecosystem to facilitate the decarbonisation of mobility in India.

Battery Swapping

The value of BS lies in the fact that separating the price of the electric car from its costliest part, the battery will make it attractive to the customer.  BS can reduce range anxiety and uncertainty as batteries can be chosen flexibly based on their size and can either be purchased or rented on a monthly basis. Also, the services could be based on a monthly subscription according to the required amount of energy, offering flexibility to the customer.

The batteries in all EVs have to be charged with electricity periodically. Apart from stationary charging (normal or fast) with a cable which is the most dominant model globally, static and dynamic conductive and inductive technologies are also available for charging. Under the BS model, the discharged battery inside an EV is exchanged for a charged battery from outside the EV in a BS station (BSS). Ideally, the BSS would store thousands of standard certified batteries with people (or robots) to carry out the swapping in a few minutes.

BS is not new. The German company Mercedes-Benz tried it in the 1970s but it did not succeed. The Israeli company Better Place reintroduced it in 2007 but it went bankrupt.  The American company Tesla tried it in 2013 with a modular design for its car. Tesla then opted for its own proprietary cable-based charging system and a business model that integrated cars and charging.

The Indian BS initiative appears to be following China which is currently seeing a revival in the sector.  The Chinese EV makers tried BS in the early 2010s, but it did not take off.  High cost of batteries and that of BS, lack of standards, lack of openness and divergent technical and economic interests amongst key stakeholders, objections from car manufacturers to opening up their vehicle structure and lack of government support are amongst the reasons cited for the failure of the Chinese early experiment with BS. The revived BS model in China addresses these concerns.  In 2020, the Chinese central government included BS technology in the ‘national new energy vehicle development strategy 2021 to 2035’ and included battery-swapping in the list of the ‘new infrastructure construction campaign’. In early 2021, there was 562 BSSs operative in China, providing service to taxis, online car-hailing vehicles, private passenger vehicles and business vehicles. More than 100,000 cars have been sold in China with battery-swapping systems.

Issues in Battery Swapping in India

The draft policy offers three arguments to justify the focus on battery swapping in the two and three-wheeler segments.  First, two and three-wheelers account for 70-80 percent of vehicles in the country; second, the two and three-wheeled electric vehicles are cost-competitive with an internal combustion engine (ICE) based vehicles and third, lighter batteries used in electric two and three-wheelers are easier to swap. These assumptions need to be qualified.  The high share of two and three‐wheelers in India’s vehicle fleet is the reason why personal vehicles (cars) account for only

The cost competitiveness of two and three-wheelers on the measure of the total cost of ownership (TCO) rests on the fact that high taxes on liquid petroleum fuels make these fuels uncompetitive against any fuel including gas.  These taxes provide a large source of revenue for the government. More than 90 percent of EVs on Indian roads today are low-speed electric scooters (less than 25 kilometres per hour ) that do not require registration and licenses. Almost all electric scooters run on lead batteries to keep the prices low. The absence of government control is the primary driver of the industry, and it is unlikely that these users are longing to use swappable lithium-ion batteries that will put them under government regulation.

The BS policy expects major car companies to share the technology around batteries (or any technology) that goes against standard commercial norms. In the traditional car industry, some compatibility exists only in minor devices such as the cigarette lighter power supply and the valve stem for tires. Compatible battery design and technology enforced by strict government mandates are likely to inhibit rather than facilitate battery manufacture. Interchangeable batteries would also mean a large quantity of scarce and expensive resources such as lithium and cobalt stagnating in BS centres.

In 2020, the Ministry of Road Transport allowed two and three-wheeled EVs to be sold in India without the batteries paving the way for battery swapping.  A handful of BS providers have since set up operations in India with the most concentrated in Delhi which has the largest private vehicle population.  Sun mobility operates in over 10 cities.  But BS has not taken off on the scale it has in China. The large investment required for BS station construction, the high financial cost of batteries in the swapping stations, battery depreciation, difficulty in achieving unified standards, overlap of the division of responsibilities, limited space for station construction and safety concerns are some of the issues inhibiting growth of BS in India. The scale of EV sales, EV charging facilities and BS services are orders of magnitude lower than that of China. India is far behind China in the manufacturing of EVs and batteries. Most importantly the Chinese government’s ability to bring together a diverse set of stakeholders to meet the strategic goal of leadership in EV and battery manufacture is difficult to replicate in India. The policy on BS is one small step in facilitating the adoption of EVs. It is a necessary but not sufficient condition to make a giant leap towards decarbonising mobility in India.

Source: Society of Manufacturers of Electric Vehicles

Monthly News Commentary: Power

Summer Drives Electricity Demand


Demand Growth

In view of the high electricity demand than the availability, the Rajasthan government has decided to go in for more power cuts, days after providing a breather by reducing the scheduled daily outage. The State government had reduced the scheduled power cut timing from 1 May but has again decided to cut power across the State as per the schedule announced on 28 April.

According to Delhi Chief Minister (CM) Arvind Kejriwal, his government is somehow handling the power supply situation in Delhi and called for quick, concrete steps to tackle the crisis facing the country. The power situation in the whole of India is very grave. Amid a deepening coal shortage crisis, the Delhi government warned that there may be a problem in providing an uninterrupted electricity supply to important establishments in the capital including Metro trains and hospitals. Delhi Power Minister had held an emergency meeting to assess the situation and wrote to the Centre requesting it to ensure adequate coal availability to power plants supplying electricity to Delhi.

The peak electricity demand for Mumbai crossed 3,660 MW, up from its usual high of 3,500 MW in summer. Experts and power utility officials fear that this could rise to nearly 4,000 MW with a rise in temperature in May. As for consumers, the increase in consumption and the rising power purchase costs could have an impact on monthly power bills, power experts said.

In order to meet the increasing electricity demand in Jammu and Kashmir (J&K), the Central government allocated 207 MW of additional power to the UT. The Union government has allocated the additional power from the unallocated quota of Central Generating Stations of the Northern Region Pool to Jammu and Kashmir. The order issued by the Union ministry of power in this regard will come into effect from midnight and the UT is expected to receive the additional supply. The UT’s Power Development Department (PDD) is also making dedicated efforts on all fronts to meet the rising demand for electricity, exploring practical and viable solutions to address the needs of the end consumers. The PDD has allocated an additional INR520 (US$ 6.7) million (mn) between 1 and 25 April to purchase power from the open market, also known as Energy Exchange. However, due to the increased number of bidding, electricity worth only INR104.1 (US$ 1.34) mn could be supplied to the UT. The early onset of summer and unprecedented hot weather conditions in the months of March and April experienced for the first time in the past 122 years and 50 years, respectively, have raised the power demand in the Jammu division. In April 2021, the power demand for the Jammu division was 830 MW per day, which has increased to 900 MW this year. The PDD is using all its resources, including purchases from the Energy Exchange, to ensure the supply of 770 MW to the Jammu division.

Uttar Pradesh (UP) Chief Minister directed officials to provide an uninterrupted power supply in the state. He said arrangements should also be made for additional (units of) electricity to maintain an uninterrupted power supply. Electricity is needed the most in the summer season, and hence uninterrupted power supply according to the roster should be maintained, the CM said. Problems arising out of transformer malfunction or damage to electrical wires should be immediately addressed, the CM said. The CM observed that snapping the power connection for non-payment of the electricity bill is not the solution, and said a dialogue should be established with the consumer and he should be motivated to pay the bill. Better and effective systems should be evolved for the collection of electricity bills, and women self-help groups should also be roped in for bill collection, the CM said. Smart meters should be installed timely in urban areas, he said. The CM said continuous coal availability should be made for electricity production, and for this, talks should be held regularly with the Centre. The work of laying electricity cables underground should be expedited in a time-bound manner, he said.

Electricity Trade

The Puducherry government signed a power procurement agreement with the public sector Neyveli Lignite Corporation (NLC) for purchase of 100 Megawatt (MW) of electricity from the Talabira thermal power project of NLC in Odisha to the Union Territory (UT). The agreement is related to the procurement of power from Talabira Thermal Power Plant of NLC India Limited in Odisha. The cost of one unit of electricity from the thermal power plant in Talabira would be INR3.06 per unit. The supply of power in keeping with the agreement would be available from 2025-2026. With the supply from NLC, there would be no shortage of electricity. Puducherry was purchasing around 400 MW of power from NLC and with the agreement signed would be assured supply for the next 10 years.

An association of industries in Goa said member units were facing power outages despite it agreeing to bear the extra cost of the state government buying electricity from the open market. As per the Goa State Industries Association, the outages were a result of poor power distribution infrastructure in the state, adding that industries were not bothered by a slight rise in tariff but electricity must be available for them to carry out operations. According to the association, a plot was given to the electricity department in Verna Industrial Estate in South Goa to set up a substation to cater to units there, but it was catering to all coastal villages in the vicinity and was overloaded. The association is of the view that the state is collecting infrastructure tax and must upgrade power utilities immediately to give relief to industries.

Discom Reform

In relief to Telangana power distribution companies (discoms), the Telangana high court (HC) stayed a central power ministry order prohibiting the discoms from procuring power from the electricity exchange citing non-payment of dues to wind and solar power generators in the state. The state discoms approached the HC stating that such steps affect their mission to supply uninterrupted power to domestic and industrial customers whilst challenging the Centre’s unilateral intervention in a subject that is on the Concurrent List. The Centre’s counsel said that they were only asking for implementation of the power purchase agreements discoms had with power generators and sought time to get instructions. The high court issued notices to the Union power ministry and its various entities and sought replies within a month whilst staying the Centre’s order.


The Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) will double up the power production in the state by 2030. The TANGEDCO will double up the power production by 2030 as well as upgrade the distribution system for an uninterrupted power supply. Currently, the power production in the state is 33,877 MW and the TANGEDCO is aiming to touch 77,153 MW by 2030. The state was also buying power through medium and short-term open assessment arrangements for an uninterrupted power supply despite the operational issues. Providing electricity connection to one lakh farmers through a scheme initiated on 29 September 2021, and completed on 29 March 2022, had helped in the irrigation of 2.13 lakh acres of farmland and was a major milestone achieved for the Tamil Nadu power department.

Regulation and Governance

With the state expecting Mumbai’s electricity consumption to rise 5 percent every year, it has given Adani Electricity permission for an 80 km, 1,000 MW underground transmission line between Aarey in Goregaon and Kudus in Thane's Wada taluka under a 25-year build-own-operate licence. The onus of compensation to owners of land acquired for substations at Aarey and Kudus will be on Adani Electricity Mumbai Infra Ltd. The project is expected to be completed by 2026. The state has initially given permission for a 25-year build-own-operate contract licence and put the onus of compensation to the owners of land acquired for transmission substations at Aarey and Kudus on Adani Electricity Mumbai Infra Limited (AEMIL).

The Central Electricity Regulatory Commission (CERC) capped all the market segments on power exchanges at INR12 per kilowatt hour (kWh), or unit, due to the increasing trend of rising prices on account of supply shortage and sudden increase in demand. The order will be in force till 30 June. CERC had already capped the Real-Time Market (RTM) and the Day Ahead Market (DAM) at INR12 per unit from the earlier INR20 on exchanges on 1 April. CERC said that analysing the recent behaviour in volume and prices at the power exchanges, based on the daily trade information published by them reveals that buy bids in DAM registered an increase of about 28 percent in April as compared to March, whilst that in RTM increased by 144 percent during the same period. However, the cleared volume in DAM registered a decrease of about 30 percent in April compared to March, whilst that in RTM decreased by 16 percent during the same period.

According to Delhi Chief Minister, from 1 October, the Delhi government will provide subsidies on electricity to consumers who opt for the scheme. The Delhi consumers at present get "zero" power bills for up to 200 units of electricity and a subsidy of INR800 on consuming 201 to 400 units of power per month.

According to Punjab Power Minister, all measures are being taken to ensure an uninterrupted supply of electricity to consumers in the state. He said that the state power utility, PSPCL (Punjab State Power Corporation Limited), is geared up to meet the increased demand for electricity during the coming paddy sowing season. The power demand has already crossed 8,500 MW and the power corporation is meeting this demand, which is 40 percent more than the previous year, he said. He said all measures are being taken to ensure an uninterrupted supply of electricity to all sections of the state, be it agricultural, industrial, commercial or domestic consumers.

Rest of the World

Asia Pacific

With more than 300 billion PKR (US$ 1.48 bn) in stuck-up dues, more than two dozen Chinese firms operating in Pakistan said that they will be forced to shut down their power plants unless payments are made upfront. About 25 representatives from Chinese independent power producers (IPPs) spoke one after the other and complained about the build-up of their dues and warned that without upfront payments they would shut down within days. Some of them said that whilst payments against power already supplied were not forthcoming and they had been financially handicapped due to the Covid-19 pandemic, the tax authorities had started taxing them at higher rates.

Vietnam wants to nearly double its total installed power generation capacity to 146,000 MW by 2030, prioritise the development of renewable sources and reduce its coal dependency, its government said. The latest draft of its power development plan will restrict the development of coal-fired power plants and be open to other fuel sources, including hydrogen and ammonia, the government said. Vietnam, a regional manufacturing powerhouse, is the largest power generator in Southeast Asia, with a total installed generation capacity of 76,620 MW at the end of 2021, according to utility EVN.

Myanmar’s junta government plans to increase investment in the energy sector, seeking to shore up the supply of power as the country grapples with lengthy daily blackouts, its Information Minister Maung Maung Ohn said. The outages have compounded economic woes faced by ordinary citizens still reeling from the turmoil that has ensued since the military seized power last year.

Africa & Middle East

South Africa's state power utility Eskom would increase the hours of daily power cut for Monday and Tuesday because it lost more generation capacity over the weekend. The beleaguered company, which runs 15 ageing coal-fired power stations, resumed more than two hours of a rolling power cut on Saturday between 5 p.m. and 10 p.m., after suspending it on Friday. Stage 3 is a level of a power cut on an eight-level system under which the utility implements a seven and a half-hour rolling outage across the country. Stage 2 is a five-hour rolling blackout. One unit at three different power stations broke down on Saturday evening, Eskom said, making a third of its capacity non-operational due to unplanned outages. It has a nominal power generation capacity of just over 45,000 MW. Eskom warned that the country "desperately" needed between 4000 and 6000 MW of additional capacity and unless that demand is met, rolling blackouts will be a regular occurrence in Africa’s most industrialised country. This year, up to 10 May, the utility has implemented 31 days of a power cut, or load shedding as it is called locally, compared with 26 days in the same period last year.

North & South America

The state of Texas' power-grid operator called on residents to cut their electricity use after six generating plants fell offline in a heat wave. Record temperatures have pushed up demand for air conditioning, contributing to soaring wholesale prices. The call for residents to conserve came after prices soared to more than US$4,000 per megawatt-hour (MWh) in Houston briefly, from less than US$6 MWh earlier. The Electric Reliability Council of Texas (ERCOT) said six-generation plants, providing 2,900 MW, tripped offline. All of the grid’s generation facilities had resumed operation. ERCOT earlier projected power demand would peak at 71,152 MW. That level would break the May record of 70,703 MW set on 9 May, but well below the state’s all-time peak of 74,820 MW reached in August 2019.

California energy officials issued a sober forecast for the state’s electrical grid, saying it lacks sufficient capacity to keep the lights on this summer and beyond if heatwaves, wildfires or other extreme events take their toll. California has amongst the most aggressive climate change policies in the world, including a goal of producing all of its electricity from carbon-free sources by 2045. Supply gaps along those lines could leave between 1 million and 4 million people without power. Outages will only happen under extreme conditions, officials cautioned and will depend in part on the success of conservation measures. In 2025, the state will still have a capacity shortfall of about 1,800 MW, according to the California Energy Commission, Public Utilities Commission, California Independent System Operator and Newsom’s office. California’s electricity planning has been challenged as devastating wildfires have cut off transmission lines and extreme heat events and drought have hampered hydropower supplies.

President Andrés Manuel López Obrador’s efforts to reshape Mexico’s electricity sector to favour the power company have spurred hundreds of lawsuits and sown a level of uncertainty that business people say is costing jobs and private investment. The president’s party succeeded in reforming the electrical industry law last year, but the lower chamber of Mexico’s congress infuriated López Obrador when lawmakers voted down a constitutional reform of the sector pushed by the president. The big power companies have remained silent, unwilling to risk their investments.

Europe & Russia

Russia had cut all its exports of electricity to Finland, after Russian utility Inter RAO said it would halt them because it had not been paid. Finnish grid operator Fingrid, which said Moscow supplied about 10 percent of Finland’s needs, said it could replace Russian supplies with Swedish power by boosting domestic production. It said the issue was related to Western sanctions that affected payments, rather than being retaliation for any other action by Finland, which was criticised by Moscow for saying it would seek to join NATO, a move Russia has long opposed. Fingrid said it had prepared for the prospect of Russia cutting electricity flows to Finland by restricting the transmission capacity by a third.

The Greek government will set a ceiling on wholesale electricity prices to help consumers and businesses cope with their soaring energy costs, Prime Minister (PM) Kyriakos Mitsotakis said. The government’s support programme will be four-pronged and will refund up to 60 percent of all the surcharges electricity consumers have paid from December until May, Mitsotakis said. This refund will be limited to €600 and will cover all consumers with annual incomes of up to €45,000 for electricity consumed in their primary homes. Electricity producers will be asked to pay a "solidarity dividend" to society, meaning their windfall income will be taxed at 90 percent. The scheme will last for up to one year. Power costs have shown no signs of abating with consumers blaming a surcharge, applied by power suppliers and activated once the average monthly wholesale power price exceeds a specific limit, for ballooning power bills in recent months.

Europe’s electricity market does not need a radical redesign, but policymakers should consider more measures to support the shift to low-carbon energy and protect consumers from high costs, EU (European Union) energy market regulators said. In response, the European Commission last year asked the EU agency for the cooperation of energy regulators (ACER) to assess how Europe’s electricity market is functioning. Most EU countries are already using tax cuts and subsidies to shield consumers from the recent jump in energy prices, but states disagree on whether Europe’s electricity market itself needs redesigning. Spain and Portugal secured EU approval to cap the cost of gas used for power in their domestic markets, and both along with other countries had initially pushed for an EU-wide price cap. ACER said any interventions should focus on the root cause of electricity price spikes - currently, high gas costs - but that the bigger the intervention, the more risk of distorting the market. One option could be temporary price limits that kick in if prices surge over a short period, it said, although it warned that could undermine the incentive to limit demand in such situations.

The Swedish Energy Markets Inspectorate (Ei) has turned down six requests by the country's electricity transmissions system operator (TSO) to limit the capacity it must make available to power traders. European Union rules stipulate that TSOs must make at least 70 percent of the capacity of power cables running between different price zones available to traders, as a way to ensure the free flow of power in the internal electricity market.

Spanish industrial production prices rose at a record annual rate for the sixth straight month in March, pushed up by soaring energy costs, data from the National Statistics Institute (INE) showed. Prices rose 46.6 percent, the fastest pace since the data series began in January 1976, led by a 134.6 percent increase in energy costs when compared to the same month last year. Russia’s invasion of Ukraine has exerted additional pressure on power costs in Europe as the bloc’s countries look for options to reduce their dependence on Russian gas.

News Highlights: 18 – 24 May 2022

National: Oil

Centre reduces excise duty on petrol by INR8 and diesel by INR6 per litre

21 May: Finance Minister Nirmala Sitharaman said the Centre has decided to reduce excise duty on petrol by INR8 per litre and on diesel by INR6 per litre to avoid the increase in fuel prices that were necessitated due to the surge in international oil prices. The move will have a revenue implication of around INR1 trillion for the government, she said. She said that the Centre will give a subsidy of INR200 per gas cylinder (up to 12 cylinders) to over 90 million beneficiaries of the Pradhan Mantri Ujjwala Yojana. This will have a revenue implication of around INR61 bn a year. Central excise duty makes up for 26 percent of petrol and diesel prices now. After considering local sales tax or VAT (Value Added Tax), the total tax incidence in the price is as high as 42 percent. The excise tax on petrol was INR9.48 per litre when the Modi government took office in 2014 and that on diesel was INR3.56 a litre. The government had between November 2014 and January 2016 raised excise duty on petrol and diesel on nine occasions to take away gains arising from plummeting global oil prices.

India supplies another 40k metric tonnes of diesel to crisis-hit Sri Lanka

21 May: India provided another 40,000 metric tonnes of diesel to Sri Lanka under the credit line facility to the island nation which is grappling with its worst economic crisis. India extended an additional US$500 million credit line to help Sri Lanka import fuel as the country has been struggling to pay for imports after its foreign exchange reserves plummeted sharply in recent times, causing a devaluation of its currency and spiralling inflation.

LPG price hiked by INR3.5 crosses INR1k mark

19 May: Oil Marketing Companies (OMCs) have hiked the prices of 14.2 kg LPG (liquefied petroleum gas) cylinders as well as 19 kg commercial cylinders. Whilst domestic LPG cylinders have been hiked by INR3.50 per cylinder, the cost of a commercial cylinder has risen by INR8 per cylinder. After this hike, domestic cylinder costs more than INR1,000 in all metro cities. After the recent hike, a 14.2 kg cylinder costs INR1,003 in Delhi, INR1,029.50 in Kolkata, INR1,003 in Mumbai and INR1,019 in Kolkata. 19 kg commercial cylinder costs INR2,354 in Delhi, INR2,453.50 in Kolkata, INR2,305.50 in Mumbai and INR2,507 in Chennai. OMCs sell 14.2 kg cylinders to domestic households at the same price as the open market. The government also offers subsidies on 12 such cylinders to each household in a year. This subsidy is transferred directly to the bank accounts of the beneficiaries.

The Indian government in talks with Russia over cut-price oil deal: HPCL Chairman

19 May: India is in talks with Russia over a deal to buy oil at discounted rates, HPCL (Hindustan Petroleum Corporation Limited) Chairman Pushp Kumar Joshi said, at a time when much of the West is shunning Russian crude over the conflict in Ukraine. India, the world’s third-biggest oil importer and consumer, is struggling like much of the rest of the world with inflation at multi-year highs and is keen to cut its import bill and protect consumers from soaring fuel prices. The country has already bought more than twice as much crude from Russia since Moscow’s invasion of Ukraine on 24 February as it did in the whole of 2021, with sources saying Indian buyers were getting discounted prices. Indian refiners are negotiating a six-month oil deal with Russia to import millions of barrels per month. In April, Russia emerged for the first time as the fourth largest oil supplier to India, accounting for about 6 percent of its purchases.

National: Gas

ONGC becomes 1st gas producer to trade on IGX

23 May: Oil and Natural Gas Corporation (ONGC) said it has become the first gas producer to trade domestic gas on the Indian Gas Exchange (IGX), trading unspecified volumes from its eastern offshore KG-DWN-98/2 block. ONGC said it will increase volumes slowly. The gas traded is from ONGC Krishna Godavari 98/2 block, it said, but did not specify the volumes that were sold. After the deregulation of the gas pricing ecosystem in 2000-21, ONGC has prepared itself to reap the benefits. ONGC is ready to realise higher value for every molecule of gas available for sale.

Natural gas supply reaches Bathinda refinery

23 May: GAIL (India) Limited has laid a dedicated pipeline to supply natural gas to HPCL Mittal Energy Ltd (HMEL)’s Bathinda refinery in Punjab. The dedicated pipeline, which will supply 1 million metric standard cubic meters per day (mmscmd) of gas to HMEL, has been laid at a cost of INR1.42 bn. The 44.26 km pipeline of 12-inch diameter (total capacity - 5 mmscmd) is a spur line of the 500 km Dadri-Bawana-Nangal Pipeline (DBNPL). The natural gas supply tap-off is taken from GAIL receiving terminal at NFL, Bathinda. The pipeline will boost the supply of natural gas in the region, resulting in increased supply for domestic households, vehicles, and commercial and industrial establishments. The DBNPL is a part of the national gas grid and runs from Dadri (Uttar Pradesh) through Yamunanagar (Haryana) to Nangal (Punjab), to meet the energy demand of these northern states. It already supplies gas to various industrial customers and city gas networks in places like Ghaziabad, Bawana, Saharanpur, Yamunanagar and Mandi Gobindgarh, Nangal, Ludhiana, NFL Bhatinda and CGS Ludhiana.

SIAM seeks a reduction in CNG prices, import duty cut on raw materials

22 May: The Society of Indian Automobile Manufacturers (SIAM) sought a reduction in CNG (compressed natural gas) prices and import duties on certain raw materials for steel and plastic products whilst welcoming the government’s decision to lower the petrol and diesel prices. The auto industry also keenly looks forward to similar support on the CNG prices which have seen an exponential increase in the last seven months, the SIAM noted.

National: Coal

India asks regulator to allow utilities to import up to 30 percent of coal needs

20 May: India has asked its federal power regulator to allow power generators to import up to 30 percent of the country’s coal requirement until March next year, according to a power ministry letter. India had asked utilities to import 10 percent of its total requirement, or about 38 million tonnes, to blend with local coal as demand was outstripping supply, adding that delivery of 19 million tonnes (MT) had to be ensured by end-June. However, in a letter to the secretary of the Central Electricity Regulatory Commission (CERC), a federal power ministry official citing a "public interest" provision in India’s electricity law said it was "imperative" power generators be allowed to use more imported coal. The demand to allow more imported coal reflects the severity of the domestic shortage, which has caused the country's worst power cuts in more than six years as a heatwave bakes vast swathes of South Asia. The power ministry said CERC had denied permission to some State government-run utilities to import, as the quantity could potentially violate rules which restrict generators from blending imported coal beyond a certain extent without the consent of beneficiaries.

Rajasthan government seeks Chhattisgarh support to start coal mining for power projects

20 May: Rajasthan has sought the intervention of the Chhattisgarh government for an early start of coal mining to help supplement fuel supplies for its electricity-generating projects at a time when the state is facing a power crunch. The Rajasthan government’s utility Rajasthan Rajya Vidyut Utpadan Nigam Limited (RRVUNL) has invested heavily in the commissioning of 4,400 MW of thermal power stations, which are supposed to source coal from its Parsa East Kanta Basan (PEKB), Parsa and Kente Extension coal blocks in Chhattisgarh. The three blocks are estimated to have an annual production of close to 30 million tonnes (MT). However, it has been able to produce only half of it from the first phase of PEKB block whilst both Parsa and Kente Extension coal blocks are yet to take off. The two blocks have got forest clearance and permission has been issued for tree felling. Rajasthan may plunge into a severe power crisis if it fails to kick start coal production from the second phase of PEKB block where it is not possible to recover coal anymore from the first phase. Also, coal production from Parsa and Kente Extension blocks is critical for Rajasthan’s energy security in the future. Last year, Rajasthan procured 17 MT of coal from Coal India Ltd (CIL) and 15 MT from PEKB block.

Government pushes states, gencos to import coal before monsoon to offset shortage

19 May: The union coal ministry, whilst acknowledging that domestic coal stock is not enough to meet the power demand, asked state governments and the power generating companies (gencos) to import coal before monsoon season sets in. The ministry has warned the gencos if they do not import coal for 10 percent blending in their fuel demand, the blending benchmark would be increased to 15 percent. The order pertains to all – central, state and independent power producers (IPPs)/privately owned units. It also said, if blending with domestic coal is not started by 15th June, domestic allocation of the concerned defaulter thermal power plants will be further reduced by 5 percent. The directive comes in wake of power stations facing acute coal shortage with an average stock of 7 days across the country. Out of the 173 power stations, 97 have critical level coal-stock (less than seven days of coal). There are around 50 units which have less than 4 days of coal, some left with barely 1 day of coal. In a letter by union power minister R K Singh, to the state governments, he said they should urge their state gencos to take immediate steps to import coal for blending in order to meet their requirement during monsoon season. The power ministry has directed all gencos to ensure adequate stocks at their power plants for smooth operation until October 2022. The ministry directed all the imported coal-based plants to start running. It however said the import by states of coal for blending is not satisfactory. The directive is a stark retraction from the union government’s earlier stance under its 'Aatmnirbhar Bharat' initiative to reduce coal imports. Union Coal Minister Pralhad Joshi said India would have zero coal imports by 2023-24. The union power ministry has said that declining coal imports are the reason for the current crisis. In 2018-19, 21.4 million tonnes (MT) of coal was imported for blending, 23.8 MT in 2019-20 and in 2021-22, it fell to 8.3 MT.

National: Power

Delhi’s peak power demand clocks a record 7 GW

21 May: The sweltering heat pushed the peak power demand in Delhi to a record 7,070 megawatt (MW), with discom (distribution company) saying that it was not only the highest ever in May but also the highest of the season so far. According to discom, this was the fourth year in Delhi’s history when the peak power demand breached the 7,000 MW mark. Prior to this, the feat was recorded on 10 July 2018 (7,016 MW), 2 July 2019 (7,409 MW), and 2 July last year (7,323 MW). The power demand peaked at 7,070 MW, as per the state load dispatch centre data. The peak power demand in discoms BRPL and BYPL was also the highest ever in May, which was successfully met, BSES said. A series of records have been set since April as people reel under recurring heatwaves in the city. The mercury crossed 49 degrees Celsius, the first ever for Delhi, at two weather stations in the city. Since 1 April, Delhi’s peak power demand has increased by over 58 percent, the discom said.

India's power grid creaks under a hybrid work model, heatwave

19 May: Indians are cranking up the air conditioning as they still work from home, whilst lights come back on in offices and factories with an end to COVID curbs, upending power demand patterns amid a heatwave and the country’s worst blackouts in years. India has traditionally seen peak demand late in the evening when people head back home but that has shifted to mid-afternoon when temperatures are hottest, government data shows, driven by record residential daytime use, a pick up in industrial work, and more use of irrigation pumps to tap higher solar supply. The power crunch in India highlights potential challenges for other nations in the region such as Pakistan and Bangladesh with even smaller generation capacities. India’s total power output in the first four months of 2022 rose by an average of 6.1 percent from a year earlier and by 24.3 percent from the COVID-hit levels of 2020, POSOCO data shows. In April, as the heatwave kicked in, average power production spiked 11.9 percent versus 2021 and 56.8 percent from 2020. Average power use over 1445-1530 hours in the afternoon surged 15.5 percent from a year ago, versus an 11.5 percent raise for the full month, data shows.

Andhra Pradesh restores full-day power for industries

18 May: The Andhra Pradesh government has withdrawn all restrictions on the power supply to industries. Energy Minister Peddireddy Ramachandra said the APERC has approved the proposal from Discoms to withdraw the restrictions to industries. Orders have been issued to this effect. He said the utilities have restored 24 x7 power supply to industries. He recalled the state government has already lifted the power holiday to industries on May 9 and restored 70 percent supply to continuous process industries. He said Chief Minister (CM) Jagan Reddy is very keen on providing reliable and quality power supply to industries and directed the power utilities the other day to lift all restrictions on industries.

National: Non-Fossil Fuels/ Climate Change Trends

Uttarakhand government, BPCL sign MoU for growth of renewable energy

20 May: An MoU (Memorandum of Understanding) was signed between the Uttarakhand government and Bharat Petroleum Corporation Limited (BPCL) in the presence of Uttarakhand Chief Minister (CM) Pushkar Singh Dhami for the growth of the renewable energy sector and other projects in the state. The CM said that the pact would lead to progress in the field of renewable energy, especially solar energy in the hill state. The CM Dhami said that the top priority for the state was the simplification of procedures. The CM said that all possible support would be provided by the state government for encouraging the solar sector. The CM directed officers of the energy department to reform the energy policy of the state, if required, and ensure all possible cooperation and assistance to institutions and entrepreneurs, especially those who want to work in the field of solar energy. Meanwhile, BPCL’s chief managing director Arun Kumar Singh said that the company will work on the development of renewable energy in Uttarakhand.

Subsidy hike, easing policy norms to push solar power in Delhi

19 May: Aiming to incentivise the installation of solar energy panels, which has seen few takers in the city so far, the Delhi government is likely to increase the subsidy and ease norms to make it more lucrative for residents. At present, individuals get an incentive of INR2 per unit only if at least 1,100 units per kW (kilowatt) are generated in a year, and none of the generation is less. According to sources, this condition could be removed in the new solar policy that is currently being formulated, thereby permitting everyone to avail of the benefits. Till the first week of May, only 3,168 households in Delhi had opted for rooftop solar plants. Sources said only 50 of about 1,400 group housing societies had the plants installed on the terrace of their buildings. Delhi government could also offer subsidies on the installation of rooftop solar energy plants — 40 percent on smaller ones of up to 3 kW and a little less on bigger ones — to make them more affordable. Currently, the Union ministry of new and renewable energy provides 30 percent subsidy on the benchmarked installation cost of solar panels. With only 230 MW (megawatt) of solar energy currently being produced in Delhi against the target of over 2,700 MW, which was set under the National Solar Power Mission in June 2015, officials said the government is keen to make it more popular amongst people.

Cabinet amends biofuels policy advances ethanol blending target to 2025-26

18 May: The Union Cabinet approved advancing the target of blending 20 percent ethanol in petrol by 5 years to 2025-26 as well as allowing more feedstocks for the production of biofuels in a bid to cut reliance on imported oil for meeting the country’s energy needs. The Cabinet, headed by Prime Minister Narendra Modi, at its meeting approved the amendments to the National Policy on Biofuels. The main amendment is for advancing the target of blending 20 percent ethanol in petrol (20 percent ethanol, 80 percent petrol) to 2025-26 from 2030. Currently, about 10 percent of ethanol is blended in petrol. Also, more feedstocks have been allowed for the production of biofuels which can be doped with auto fuels. It also provides for promoting the production of biofuels in the country, under the Make in India programme, by units located in Special Economic Zones (SEZ)/ Export Oriented Units (EoUs). The Cabinet approved granting "permission for export of biofuels in specific cases".  The existing National Policy on Biofuels came up in 2018.

Rays Experts to commission the world’s largest solar park in Rajasthan

18 May: Rays Experts said it will commission the world's largest solar park in Rajasthan with a 3000 MWp (megawatt peak) capacity. The 9000-acre solar park will be built in Bikaner, Rajasthan. It has signed the necessary transmission agreements and obtained all approvals for the same, the company said. This is the first and the only 100 percent privately owned ultra mega solar park in the country connected to the central transmission system, it said. All the other major solar parks built in the past are partly or fully government-owned. The company claims to be the largest solar park developer in India. This solar park will be ready-to-move infrastructure for multiple solar developers who can save huge costs and time as land, transmission lines etc are already arranged. Currently, the transmission capacity availability in the network is the biggest open risk for solar developers and this solar park addresses the same to a large extent. Due to its market presence, Rays Experts holds 100 percent market share of private solar park projects in Rajasthan and Haryana with a 95 percent customer retention ratio.

International: Oil

Kazakhstan sees 2023 oil output up at over 90 MT

23 May: Kazakhstan expects to produce 90-93 million tonnes (MT) of oil next year, up from 87.5 MT this year, depending on when expansion projects at the giant Tengiz field are completed as they may be slightly delayed, its Energy Minister Bolat Akchulakov said. The Central Asian nation believes Western sanctions against Russia will have no effect on the transhipment of Kazakh crude to Europe, Akchulakov said. The Chevron-led venture developing Tengiz planned to complete one expansion project by March 2023 and the second one by November 2023, but Akchulakov said the US$45 billion expansion could be delayed by a few months. Field outages for planned maintenance are another factor affecting output and Akchulakov said that after this year’s two-month maintenance at the giant Kashagan field that will start in June, no major outages were scheduled for 2023.

Norway’s April crude oil output lags forecasts by 10.6 percent

20 May: Norway’s crude oil output in April missed the official forecast by 10.6 percent, whilst its gas output was in line with expectations, preliminary data from the Norwegian Petroleum Directorate (NPD) showed. Crude oil output fell to 1.66 million barrels per day (bpd) in April from 1.74 million bpd in March, lagging a forecast of 1.86 million bpd, the NPD said. The sale of natural gas is now Norway's most profitable export, exceeding traditionally dominant crude oil revenue, as Europe scrambles to fill depleted gas storage amid fears the war in Ukraine will lead to a loss of Russian supplies.

China quietly increases purchases of low-priced Russian oil

20 May: China is quietly ramping up purchases of oil from Russia at bargain prices, according to shipping data and oil traders, filling the vacuum left by Western buyers backing away from business with Russia after its invasion of Ukraine in February. The move by the world’s biggest oil importer comes a month after it initially cut back on Russian supplies, for fear of appearing to openly support Moscow and potentially expose its state oil giants to sanctions.

ADNOC announces three new oil discoveries

19 May: Abu Dhabi National Oil Company (ADNOC) announced three oil discoveries including one at Bu Hasa, Abu Dhabi’s biggest onshore field, with a crude oil production capacity of 650,000 barrels per day (bpd), the company said. The discovery in Bu Hasa includes 500 million barrels of oil from an exploration well in the field, the company said. ADNOC said the second oil find was in Abu Dhabi’s Onshore Block 3, operated by Occidental, and around 100 million barrels of oil in place were discovered. In the third discovery, around 50 million barrels of light and sweet Murban-quality crude were found in the Al Dhafra Petroleum Concession, ADNOC said.

Greece emerging as a new hub for Russian ship-to-ship fuel oil exports

18 May: Russian fuel oil arrivals offshore Greece jumped to record levels in April, as sanctions on Moscow drive traders to find new ways to export Russian oil via ship-to-ship (STS) loadings, Refinitiv Eikon data showed. Trading Russian crude and oil products remain legal for now as the European Union is yet to fully agree on a proposed embargo, but banking and other financial sanctions on Russia following its invasion of Ukraine on 24 February have made it increasingly more difficult to do so. In April, shipments of Russian fuel oil with Greece as a destination reached nearly 0.9 million tonnes (MT), about double March levels and could reach new records in May, according to data. The bulk of this was shipped from Russian ports to Greece’s Kalamata port, the data showed. Traders said the fuel oil - a by-product of refining crude oil into lighter, cleaner products like auto fuels - is being stored and blended offshore on board tankers and being loaded via ship-to-ship transfer for re-export.

Ecopetrol, Occidental to develop four offshore oil blocks

18 May: Colombia’s majority state-owned energy company, Ecopetrol, announced an agreement to develop four offshore, deep-water blocks with a subsidiary of US oil major Occidental. The four blocks are located in deep waters some 150 kilometers off Colombia's northern Caribbean coast, Ecopetrol said. Ecopetrol will take a 40 percent stake in the blocks whilst Occidental subsidiary Anadarko Colombia Co will have a 60 percent stake and will serve as the blocks' operator, Ecopetrol said. The deal is subject to approval from Colombia’s oil regulator, the company said.

International: Gas

Poland ends deal to receive Russian gas after rouble dispute

23 May: Poland said it had terminated its agreement with Russia to receive Russian gas via the Yamal pipeline after Warsaw rejected a demand to pay for the fuel in roubles and Moscow responded by cutting off supplies in April. Polish Climate Minister Anna Moskwa, who announced the decision, said that Warsaw’s move did not affect gas flows from Germany to Poland via the pipeline, which is operated by a Polish company. Poland previously said it did not plan to extend the supply contract that had been due to expire at the end of 2022. Polish gas firm PGNiG had told Russian gas exporter Gazprom in 2019 that it would not renew the deal. Warsaw has refused to comply with Russia’s demand for European countries to pay for gas in roubles, even though most contracts are denominated in euros or dollars. Poland has used the pipeline to receive gas from Germany by reversing the flows when gas has not flowed from Russia toward western Europe. The Polish section of the Yamal pipeline that links Russia with western Europe is owned by a joint venture of Gazprom and PGNiG but it is operated by Poland’s gas transmission company Gaz-System.

Blackstone unit acquires 49 percent stake in US LNG facility

20 May: Blackstone Inc’s credit investment unit said it has bought a 49 percent stake in a liquefied natural gas (LNG) facility in Georgia from private equity firm EIG Global Energy Partners. The deal, whose terms were not disclosed, comes at a time of red-hot demand for US (United States) LNG as Western sanctions on Russian fuel squeeze supply. US pipeline operator Kinder Morgan will continue holding the remaining 51 percent of Elba Liquefaction Company. The facility has the capacity to liquefy about 2.5 million tonnes (MT) of LNG per year for export, Blackstone Credit said.

Russia sees gas prices for outside CIS rising 72 percent in 2022

18 May: The Russian economy ministry expects prices for Russia’s natural gas for consumers outside the CIS countries to rise 72 percent in 2022 to US$523.3 per 1,000 cubic metres. Russia’s gas exports will shrink 10 percent this year to 185 billion cubic meters (bcm). The economy ministry expects Russia’s gas output to decline to 721 bcm in 2022 from 764 bcm in 2021.

The Swiss government and the gas industry work to boost gas reserves

18 May: The Swiss government and the country’s natural gas sector have agreed to boost storage capacity in neighbouring countries and secure extra supply options ahead of winter, the cabinet said. Switzerland depends on imports for gas and does not have its own gas storage facilities. Gas accounts for around 15 percent of the country’s overall energy consumption. The plans seek to set up a winter gas reserve that would minimise the impact should Russian gas supplies be disrupted. Swiss suppliers secure regular supplies partly through storage mainly in neighbouring countries.

International: Coal

China’s coal imports from Russia nearly double amid the Ukraine crisis

21 May: China’s coal imports from Russia nearly doubled between March and April, reaching 4.42 million metric tonnes (MMT). China is buying record amounts of cheap Russian coal which has reached 4.42 MMT.  According to the American broadcaster, Russia has overtaken Australia as China’s second-biggest supplier since last year and now accounts for 19 percent of its coal imports, up from the 14 percent share it had in March. Ilya Makarov, the director of the corporate ratings at Moscow-based rating agency ACRA, had earlier warned that the Asian shift was straining Russia's rail freight capabilities and risked pushing down coal prices in the Asian market. China has taken full advantage of Russia’s invasion of Ukraine, grabbing the huge discount offered by Moscow on coking coal which is used in steel mills, as Japan and the European Union have curbed imports leaving the Russian companies scrambling for buyers. This year, China has planned to up the ante on coal mining as well. Only in a single year, nearly 300 million tonnes (MT) of additional coal will be extracted this year. It will be 7 percent higher than that mined in 2021-- 4.1 billion tonnes.

International: Non-Fossil Fuels/ Climate Change Trends

Four countries pledge a tenfold rise in EU offshore wind power capacity

18 May: Germany, Belgium, the Netherlands and Denmark pledged to build at least 150 gigawatts (GW) of offshore wind capacity in the North Sea by 2050 to create a "green power plant" for Europe. But the task will be challenging as the European wind supply chain is struggling to make money and the pace of build-outs is being slowed by long permitting times. Some 150 GW would be enough to power 230 million European homes but the ambition is also to use the green power to make hydrogen and green fuels for heavy industries and transportation which cannot easily be directly electrified, Danish Business Minister Simon Kollerup said. The European Commission also unveiled a 210 billion euro plan for Europe to end its reliance on Russian fossil fuels by 2027, and to use the pivot away from Moscow to quicken its transition to green energy. The Commission targets 300 GW of wind at sea by 2050 up from the roughly 16 GW currently installed. Denmark’s Climate and Energy Minister Dan Jorgensen said the cost of installing 150 GW of offshore wind power would amount to hundreds of billions of dollars and would be financed mainly by private investors with small state subsidies. If the target is met, it would be an almost tenfold increase in the European Union (EU)’s offshore wind capacity, and the promise comes as the bloc tries to wean itself off planet-warming fossil fuels and its dependency on Russian energy.

This is a weekly publication of the Observer Research Foundation (ORF). It covers current national and international information on energy categorised systematically to add value. The year 2021 is the eighteenth continuous year of publication of the newsletter. The newsletter is registered with the Registrar of News Paper for India under No. DELENG / 2004 / 13485.

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