Energy News Monitor I Volume VIII, Issue 19

India needs a comprehensive energy policy

Sunjoy Joshi, Director, Observer Research Foundation

ith an ugly power crisis rearing its head, most citizens have braced themselves for a Diwali of blackouts. What threatens the country's energy security today emanates not from volatile markets, or from an inimical state across the Himalayan border, it arises purely from regulatory and policy uncertainty. It arises of an organic incapacity to keep and to clear long-term policy goals.

When the crash of 2008 came, it saw some of the most aggressive and coordinated interventions across the developed world. In spite of these interventions, the year 2009 saw the first real decline in global GDP since 1946. The decline, more significantly, was uneven. Economic powerhouses like India and China continued to see substantial growth in their national GDP.

The story of that growth, at least for India today, seems about to be interrupted. Traditionally, both China and India have been dependent on coal to fuel their energy needs. However, in spite of large domestic reserves, both countries are today faced with a shortage of supplies because of constraints in production as well as bottlenecks in transporting it to distant centres of consumption.

Both are forced to import increasing quantities. China already produces almost half of all the world's coal and annually increases production by close to 9% each year. India, on the other hand, has been more erratic. From growing steadily at 6-8% in the past, growth sharply decelerated to just 2.1% last year. Indications are that in the first five months of the current fiscal year, domestic production declined by 2.5%.

The emphasis on imported coal is, therefore, inevitable even for India's existing and planned capacities. China and India together account for 25% of the global coal trade pegged at about 800 MMT per annum. It's little wonder that movements in global coal prices are determined by what happens to demand for the commodity in these two countries. This causal relationship is likely to be exaggerated as India strives to quadruple its present power generation to an annual 3,200 TWH as it seeks to provide a modest 250 watts of usable capacity per person.

The big question is what fuels are going to be used to fire this huge capacity addition. Nuclear as well as renewable energy are not seen to be making a very significant dent in the net share of fuels over the next two decades. Within this period, we have to either rely on coal or turn to gas, which is today recognised as the most important bridge fuel.

Attempts to get private sector involved in coal mining have not been too successful. So far, of the 215 coal blocks allocated under the captive mining policy, only 26 are reported to have begun production by end of 2010. Even for these few, the time taken to reach production has varied from two to 12 years due to delays in statutory approvals; land acquisition and multiparty approvals.

But more importantly, the questionable rationale of a captive coal policy that treats coal mining as an add-on secondary activity rather than a commercial activity may in itself be responsible for the current stalemate.

Finally, it is illogical to expect that reforms will, can or should happen in the coal sector in isolation. If we think reforms, then we need to look at the entire energy space as an integrated whole. The policy uncertainty we are faced with today is largely the result of trying to manage this most vital critical infrastructure space by desegregating it into independent silos and sectors. Pricing across all sectors needs to become far more rational and market-oriented; the linkages across fuels, their substitutability has to be allowed to be reflected in price signals.

This is not being unpragmatic in any way. In a country like India, with vast inequalities and disparities, subsidies cannot be wished away. However, the costs of subsidies have to be clearly and transparently borne upfront. Subsidies cannot be administered by sleight of hand.

The present forms of subsidies have created disparities not only across sectors but between segments of the same sector. They create vast opportunities for arbitrage and rents, and have made some grow at the cost of others. More dangerously, by completely distorting price signals, they are now severely limiting long-term access to fuel supplies.

The administration of subsidies through price controls does little to solve far more pressing problems that have to do with issues of access and entitlements to energy resources. Therefore, even where we recognise the need for subsidies, we need to overhaul them to address issues of access directly.

Today, in the face of global recession, we face a double jeopardy. The impact of the slowdown threatens our export markets. It puts a big question mark on how far our service sector-led growth will take us down the road to employment generation for the millions entering our workforce each year.

If recovery is a longer haul, then the only solution will be to stimulate the domestic economy by higher spending on infrastructure. This only can sustain growth in employment and mitigate the effects of slowdown across the world. Let us recognise that in the coming time, our efforts to sustain even a decent modicum of growth is going to be severely hampered by our ability to access energy.

We need to think in terms of a comprehensive energy policy rather than work in such complete disarray having fractious policies for coal, power, fertiliser, oil and gas, and so on.

Concluded

Views are those of the author

Courtesy: The Economic Times, 24 October 2011

A way out of Power Crises

Shankar Sharma, Power Policy Analyst

lmost all the states in the country are facing power crises despite a reasonably good monsoon. While the coal supply issue has acquired a crisis like situation due to flooded coal fields, strike by coal miners and steep hike in coal imports, the demand for electricity is ever increasing even after a decent monsoon season. As a matter of fact the power cuts are a continuation of the phenomenon of the last few years. No section of the consumers has remained unaffected with strong protests being reported from all over the state.

Everyone, except probably those who are directly accountable to the crises, should be thinking of the way out of this decades’ long mess, which is affecting all aspects of our life. A keen observer of the power sector may reiterate that there are no quick-fix solutions to the problems besetting the power sector. The crisis we are in is not the making of any single government or of the omissions and commissions in one year. It is the result of the continuous failure of the concerned authorities for decades to read the writing on the wall. In the immediate context there can only be some measures to reduce the severity of the crises. However, the STATE should not leave any stone unturned in finding suitable solutions, even if it looks difficult to achieve or costly. No power is costlier than the costliest power in certain situations. The impact on our society that has arisen due to chronic power cuts in the country during last many years has not been appreciated by most people; not even by the decision makers. Otherwise, the situation would not have been allowed to degenerate to such a low level.

People have been advocating many of the following measures for almost 25 years. Late Prof. A K N Reddy of IISc is known to have provided many of these measures way back in mid 80s. Most of these measures may need concurrence of the state regulators, and is advisable to obtain the same urgently.

· Negotiate with the owners of captive power plants so as to make use of their idle capacity, if any, at least during the peak demand hours. For various technical reasons the cost of such power may not be much higher than the imported power.

· ESCOMs should procure good quality CFL lamps in adequate numbers and supply them to consumers to replace the incandescent lamps at reasonable rates. We may be able to reduce the peak demand by about 5,000- 10,000 MW, and save energy requirement of about 1,500 to 2,000 MU per month.

· Start a massive and concerted public awareness campaign on energy conservation and energy usage efficiency through electronic and print media, and with the help of credible NGOs. Appeal to the domestic consumers to save 5-10% of energy every month as compared to the consumption during corresponding months of last year.

· Appeal to the public to avoid using electrical appliances other than essential lighting accessories between 6.00 AM to 8.00 AM and between 6.00 PM and 8.00 PM.

· The energy conservation and energy usage efficiency measures will provide maximum benefits, if they are undertaken on a war footing basis in those geographical areas of the state which are far away from main generating sources etc.

· Consider, through executive orders in each state, if necessary, asking all commercial installations above a certain connected load, say 5 kW, to reduce their energy consumption by 10% as compared to corresponding month of the previous year until further notice. These measures are better implemented with the consent of the state regulators.

· Ban the illuminated hoardings /advertisement boards until further notice.

· Consider banning the operation of shopping malls and other non-essential commercial establishments with connected load of, say, above 5 kW after 7.00 PM till 10.00 AM.

· Ban all night time sports until further notice. In case of the already committed national and international sports events ask the hosts to enter into agreement with private companies outside the state to buy the necessary amounts of energy and peak demand power.

· Ban all the decorative lighting applications until further notice.

· There is a scope for drastically reducing the wastages in street lights. In most of the urban areas there is unnecessarily high illumination of the streets. Consider asking all urban local bodies to disconnect power supply to every alternate street light pole in highly illuminated areas.

· Consult industry bodies such as FICCI and CII to reduce monthly energy consumption in industrial units by 5-10 % as compared to corresponding month of the previous year. Consider the option of two weekly holidays and /or one or two shifts only for industries.

· Take strict measures to keep the street lights off during day light, and make clearly identified individuals in local bodies responsible for the violations. Install light sensitive auto switches to the street lights on a priority basis.

· Ask all govt. offices not to use Air Conditioning where alternatives are available. Mandate them to reduce energy consumption by 10%.

· Mandate reduction by 50% the energy consumption of the lifts in non-essential locations.

· A task force in each state on electricity can go a long way in addressing the power crises not only in the short term but also to recommend/implement sustainable methods of meeting the electricity/energy demand.

Medium to long term measures

Whereas the above mentioned measures can give short term relief, the long term view of the demand/supply of electricity should never be ignored. It is the lack of such foresight since decades which has resulted in the present day crises.

Only concrete and focused measures will provide the lasting solution to our crises, and not the shortcuts or knee jerk reactions, which successive governments have been following. Industry experts are of the opinion that the electricity shortages in the state as experienced in the recent past and as projected for the foreseeable future are entirely avoidable. There is adequate power generating capacity in most of the states; but the crises are due to the grossly inadequate attention to manage the same efficiently. Each of the state govt. should consider convening a meeting of the ESCOMs, consumer groups, industry observers, and other interested parties early to find suitable ways to tide over the situation. The public would expect the authorities to know that without the active co-operation of the public the power sector crises cannot be overcome even in a decade.

Due diligence such as detailed studies and effective public consultations is required if we are to aim at finding sustainable measures as mentioned below.

· Effective and sustained awareness campaign should be launched to draw the attention of the society that there cannot be limitless supply of electricity/energy; that the cost of providing electricity/energy is going up steeply every year; that the real cost to our society of providing electricity/energy to our houses, offices, shops, irrigation pump sets, industries etc. is much more than what we are paying now; and that the highest possible efficiency and responsibility in the usage is essential.

· Through effective participation of various stake holders the realistic price of delivering electricity to the end consumers should be determined, and every consumer should be persuaded to pay the diligently determined tariff for the electricity usage which is measured accurately. Such a realistic tariff should lead to very responsible use of electricity.

· All the concerned people in the power sector, including the STATE, would do well to realize that only through an integrated energy management approach, involving optimal utilisation of the existing assets, effective demand side management, realistic levels of energy conservation, and widespread use of renewable energy resources, can the legitimate demand for electricity of every section of our society be satisfactorily met on a sustainable basis.

· T&D losses should be targeted to be reduced below 10% by 2015. End use efficiency should be improved by making high efficiency appliances financially attractive to deploy.

· Persuade sports bodies such as cricket stadia, Hockey stadia, football stadia etc. to install solar photo voltaic panels on their roofs to generate adequate power to meet their own requirements. Such sports and entertainment bodies should be asked to generate a certain percentage of their monthly electricity requirements (say 25% of their monthly usage) through solar photo-voltaic panels installed on their roof tops.

· Through consultations with the public and the regulator, the widespread usage of roof top solar photo voltaic panels should be implemented on the premises of residences, shops, industries, schools, colleges, offices etc. not only to generate electricity for local usage, but also to export the excess electricity to the grid. This practice will drastically reduce the need for coal based, dam based and nuclear based power plants.

· Similarly, suitably designed community based solar power plants OR bio-mass power plants can reduce the pressure on the existing power grid by a huge margin; will minimize the T&D losses; accelerate the rural electrification; and can go a long way in reducing urban migration.

· Positive intervention through tariff policies has huge potential to reduce the peak hour electricity demand on the electricity grid by measures such time-of-day tariff and penalties/incentives for peak hour usage; staggering of weekly holidays and factory working hours.

· Through a carefully planned integrated energy management approach the reliance on coal based, dam based and nuclear based power plants should be gradually reduced.

· An objective costs and benefits analysis of every power project proposal, through effective public participation, will assist in ensuring real benefits to the society.

It is high time that the concerned authorities realize that seeking to meet the electricity demand through more of coal power plants (despite the fast depleting coal reserves and in the context of many water stressed states in the country); or through building more of hydel power plants (in the already threatened Himalayas); or through life threatening nuclear reactors will be futile exercises keeping in view the hugely deleterious impacts of these conventional power sources on our communities. The daily saga of how coal power plants in the country are suffering due to loss of coal supply is a clear indication of the difficult days ahead for the entire country. Any one following the developments in domestic and international coal markets will be able to surmise that coal power plants cannot be a sustainable option. At a time when drinking water supply has become a serious issue for thousands of our villages, even to contemplate on additional coal power plants, which will require huge quantities of fresh water, should be unacceptable.

A paradigm shift in the way our society looks at demand/supply of electricity/energy is urgently required. In the eagerness to meet the insatiable demand of electricity to our urban areas, we should not ignore the basic requirements of rural communities such as clean air, drinking water, livelihood, absence of threat of forcible displacement etc. Are we serious about this societal obligation?

Concluded

Views are those of the author

Author can be contacted at [email protected]

NEWS BRIEF

NATIONAL

OIL & GAS

Upstream

Cairn India subsidiary drills second oil well in Sri Lanka

October 22, 2011. An Indian company, engaged in exploring oil in the seas of northern Sri Lanka, has begun drilling a second well. Cairn Lanka, a subsidiary of Cairn India which had recently announced the discovery of oil in the Mannar basin, has begun drilling a second well in search of oil in the island nation. Cairn, in the first well, found a 25-metre hydrocarbon deposit at a depth of 3,000 metres. The Indian company has now started work on a second well after its first successful attempt, and also hopes to drill three wells under its exploration programme, which is expected to be completed early in 2012. Cairn India, announced that it had struck natural gas reserves in the very first well it drilled in the offshore Mannar basin of Sri Lanka. Cairn stated that if Sri Lanka's drilling programme is successful, commercial oil production could be expected by 2014 with a billion barrels.

CAG to probe Reliance Industries' drilling of D6 dry wells

October 21, 2011. The Directorate General of Hydrocarbon's (DGH) move to armtwist Reliance Industries into spending about ` 3,000 crore to drill four new wells at the KG-D6 block faces scrutiny by the national auditor as the wells turned out to be dry and the government will have to foot the bill. What makes the situation awkward for the DGH, the technical arm of the oil ministry, is that Reliance, the operator of the block, had told the authorities that the reservoir had turned out to be different from its initial assessment and drilling new wells might not boost output. The DGH was convinced the sharp decline in output from the D6 block could be reversed by drilling more wells as initially planned. Reliance, on the other hand, had argued that geological realities turned out to be different from what the assessment from the surface had indicated.

Cairn India sees Rajasthan output jumping 40 pc

October 20, 2011. Cairn India said it will hike Rajasthan crude oil output by 40 per cent to 175,000 barrels per day by the end of this fiscal as it sees strong support from partner ONGC and government post resolution of the royalty issue. The company, which had a tough time ever since its parent Cairn Energy Plc announced sale of majority stake to London- listed mining group Vedanta Resources, made a one-time payment towards royalty on the Rajasthan block that pulled down its quarterly profit for the first time in two years. Cairn made a one-time royalty payment of $294 million on its 70 per cent share of crude oil produced from Rajasthan fields. The company had agreed to make payments cost recoverable. The company does not pay royalty on Rajasthan crude and Oil and Natural Gas Corp (ONGC) on Cairn's behalf. Cost recovery of royalty -- deducting royalty payments, like other project costs, from revenues earned from crude oil sales before profits are split between partners -- was one of the pre-conditions that the government had set for approving Cairn Energy's sale of 40 per cent stake to Vedanta. Having agreed to that, Cairn saw strong support from ONGC in raising output from Rajasthan and clearance for pending regulatory approvals from the government. Cairn produces 125,000 bpd from the Mangala oilfield in Rajasthan block, the largest field in the prolific area. This output can be hiked to 150,000 bpd or 7.5 million tonnes a year while the rest will come from the block's second biggest oilfield, Bhagyam. Bhagyam has an approved plateau production rate of 40,000 barrels per day but Cairn believes it can produce 60,000 bpd. Aishwariya field can do 25,000 bpd instead of 10,000 bpd envisaged earlier, and the company hopes to file revised field development plans (FDPs) for these shortly. Cairn is likely to achieve at least 235,000 bpd of output or 30 per cent of the nation's current domestic production by 2013.

Downstream

Essar's refinery to run at 375,000 bpd by end of March

October 24, 2011. Essar Energy's Vadinar refinery will stabilise at an enhanced capacity of 375,000 barrels per day (bpd) by end-March. Essar had shut the refinery in western Gujarat state last month for 35 days to raise capacity by 25 percent and increase complexity to process more heavy and ultra heavy crude oil. Essar is also on track to further raise capacity to 405,000 bpd by September 2012. The second expansion involves converting the redundant Vizbreaker Unit into a second crude distillation unit. India has a surplus refining capacity but it still imports fuel as private firms, controlling over a third of current capacity, prefer to export because they, unlike state retailers, are not compensated for sale of fuel on state-set cheaper rates. The country's refining capacity is expected to rise 20 percent to about 4.65 million bpd at the end of the current fiscal year to March. Essar was in talks to buy crudes from Latin America to feed its expanding refining capacity as it plans to upgrade its Vadinar plant. The firm's fuel oil exports would almost halt after the expansion of the refinery.

BPCL Kochi Refinery poised for ` 200 bn expansion

October 21, 2011. The union minister for petroleum and natural gas S Jaipal Reddy dedicated to the nation the ` 4000 crore capacity expansion and modernization project phase II of Bharat Petroleum Kochi Refinery. The project envisages refining capacity expansion from 7.5 million tones to 9.5 million tones making BPCL KRL fully equipped to make euro III grade petrol and diesel. With this, the total refining capacity of the BPCL group now stands at 30.5 million tonnes BPCL KRL is poised for further expansion to 15.5 million tonnes along with a foray into petrochemicals segment. This project envisages an investment of ` 20,000 crore. The company had requested for special concession of deferment of sales tax for 15 years for the proposed expansion. The regassified LNG terminal at Kochi is in an advanced stage of construction under the aegis of Petronet LNG. The ` 4200 crore project is expected to be completed by 2012 and will provide 4500 MW of power.

IOC raises borrowing limit to ` 1100 bn

October 21, 2011. Indian Oil Corp (IOC) has got shareholders' nod to raise its borrowing limit by ` 30,000 crore to ` 110,000 crore as the nation's largest fuel retailer has grown increasingly reliant on debt to meet even its day-to-day expenses. The company loses ` 158 crore per day on selling diesel, cooking gas (LPG) to households and kerosene at government-controlled rates, which are way below their production cost. IOC, which had in 2008 doubled its borrowing limit to ` 80,000 crore, currently has gross debt of over ` 78,000 crore. With continued losses, the company feared borrowings may cross the approved level of ` 80,000 crore by December. The company, in which the government owns a 78.92 per cent stake, had last month initiated a process to raise its borrowing limit through a postal ballot. The company currently loses ` 7.06 on sales of every litre of diesel, ` 25.90 per litre on PDS kerosene and ` 270.50 per 14.2-kg domestic LPG cylinder. The company loses 10-15 paisa per litre on the sale of petrol, a commodity which was decontrolled in June last year. While freeing petrol pricing from its control, the government had stated that diesel would also migrate to a free price regime shortly. But diesel rates have not been freed till now.

Transportation / Trade

Andhra Pradesh seeks Centre's nod for laying gas distribution network

October 22, 2011. Andhra Pradesh sought the Centre's permission to lay extensive gas distribution network to take natural gas sourced from the state and the adjoining Bay of Bengal to the intended beneficiaries. The state Government has decided to obtain "maximum benefit of this important natural resource which at the moment, is moving to other parts of the country for lack of connectivity development."

BPCL buys 20,000 tonnes of gasoline from Vitol

October 20, 2011. Bharat Petroleum Corp Ltd has bought 20,000 tonnes of gasoline from Vitol for delivery in November. The state-owned refiner bought two 10,000 tonne gasoline cargoes, one a Euro-III and another a Euro-IV compliant grade, for Nov. 12-15 arrival at Kandla. It paid premiums of $5.80 a barrel and $6.50 a barrel to Singapore quotes for the Euro-III and Euro-IV compliant grades respectively. The cargoes will be supplied by Vitol. The levels paid are similar to its previous purchase of a combination cargo of 20,000 tonnes of Euro 3 and 4 gasoline from Shell at a premium of $6.50 a barrel over Singapore quotes for delivery into Kandla over Aug. 8-12.

Policy / Performance

Global consultant to certify RIL's $1.5 bn proposal in D6 block

October 24, 2011. A global consultant will authenticate Reliance's $1.52-billion proposal to produce about 10 million standard cubic metres per day of gas from four satellite discoveries in its D6 block and also verify operator's argument that gas prices should be raised above the existing level of $4.20 per unit to make the project viable. The decision would further delay the project that is awaiting government approval since 2009. The government is treading cautiously as RIL has demanded raising sale price of gas to make the project viable. The matter is expected to be discussed at KG-D6's management committee. Each oil or gas block is governed by its management committee, which is represented by the contractor and representatives from DGH and the government. The satellite discoveries are scattered in the D6 block where RIL is set to produce 1.3 trillion cubic feet of gas in addition to the existing output of about 45 mmscmd. DGH had sought the oil ministry's approval to Reliance's optimum field development plan for developing the four satellite fields and asked it to convene a meeting of the block's management committee that will approve the budget.

ONGC to gain over ` 13 bn as rupee falls to 30-month low

October 23, 2011. With the rupee touching a 30-month low against the US dollar, ONGC will get a windfall of over ` 1,300 crore from the domestically produced natural gas, which is priced in dollar. The windfall is courtesy the Oil Ministry, which changed the pricing of domestically produced natural gas from rupee to the US dollar. The ministry had decided that gas produced by ONGC and Oil India should be priced in US dollars when rates were revised to $ 3.818 per million British thermal units ($ 4.2 per mmBtu after including royalty) from ` 3,200 per thousand cubic metres (equivalent to $ 1.79 per mmBtu). However, with rupee dropping below ` 50 per dollar from less than ` 45 three months back, fertiliser firms and power producers are having to shell out ` 3.5 crore more every day. From 52 million cubic metres per day of gas production, ONGC will gain ` 1,304 crore on an annualised basis at the higher exchange rate. The windfall that ONGC is getting is actually being borne by consumers who have to shell out more in electricity rates and fertiliser costs. This situation as well as a scenario where the rupee hardening hurts ONGC's revenue, could have been avoided if domestic gas was priced at the equivalent of $ 3.818 per mmBtu in rupees, as had been the past practice. Reliance Industries (RIL), the nation's second-biggest gas producer, stands to gain ` 1,240 crore on production of 45 mmcmd of gas from its eastern offshore KG-D6 fields in a year due to weakening of the rupee. While KG-D6 gas could not have been priced in rupees, as the contract for the field explicitly provides for pricing of the fuel in US dollars, the additional burden on power and fertiliser firms could have been avoided if the proposal from RIL of having a fixed rupee-dollar ratio had been accepted. RIL had in 2007 proposed that the exchange rate could be fixed at ` 45 to a US dollar while deciding on KG-D6 price. The rupee was trading at around 43 to a dollar at that time and so it was rejected. It was stated that prevailing exchange rates would be used for the purpose of conversion of the $ 4.2 per mmBtu price fixed for KG-D6 gas into rupees. Incidentally, by the time RIL began gas production in April 2009, the rupee had weakened to ` 45 per dollar. Sources said that besides the gas price, the $ 0.11 per mmBtu marketing margin charged by state-owned GAIL India for the effort it makes in selling gas produced by ONGC, too, is US dollar-linked.

Jaipal Reddy rules out fuel price cut as rupee depreciates

October 20, 2011. Oil marketing companies will not cut fuel prices even if crude oil prices dip below $100 a barrel as any gain in crude oil prices is offset by losses due to depreciation of rupee, oil minister Jaipal Reddy said. Reddy also said that the government will continue subsidising cooking gas for the poor but it is considering to limit the number of gas cylinders to focus on subsidising only the poor. Reddy said oil prices have remained high for a long time, hurting the finances of companies like Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum, and the situation had deteriorated further as the finance ministry had not released promised subsidy payment of ` 15,000 crore in the first quarter of 2010-11.

High fuel prices scorch firecracker business, says survey

October 20, 2011. Spiralling fuel prices have considerably affected the firecracker business this Diwali, a survey said. The study was conducted by Associated Chambers of Commerce and Industry of India (Assocham) after interacting with 250 firecracker manufacturers in Sivakasi in Tamil Nadu and 500 fireworks wholesale and retail markets in cities like Ahmedabad, Bangalore, Chandigarh, Chennai, Delhi, Hyderabad, Kolkata, Lucknow, Mumbai and Pune. Key reasons cited by sellers were abnormal increase in fuel prices, escalating raw material (sulphur, potassium nitrate and waste paper) costs, increased road freight charges and shortage of skilled labour.

About 55 percent of firecracker manufacturers and wholesalers in Sivakasi claimed that there had been a drop of about 15 percent in orders from northern states, which consume over 75 per cent of their total production. Majority of firecracker manufacturers in Sivakasi said the cost of producing crackers had gone up by about 25 to 30 per cent this year due to skyrocketing prices of raw materials. Sivakasi is home to over 9,500 firecracker factories. Apart from fuel prices, increasing awareness on pollution due to crackers and restrictions of the local administration and fire department are also contributing to the slump. For example, the survey indicates that in Delhi the profit margins of fireworks industry have trimmed by over 40 percent in the last two years. Almost all fireworks traders in Delhi are giving details of decibel level and manufacturing date as customers demand it. About 5,000 temporary stalls come up in Delhi every year to sell fireworks.

State-run oil cos like Indian Oil Corp, Bharat Petroleum Corp Ltd again pitch for fuel price hike

October 19, 2011. State-run oil marketing companies fear that they will not be able to meet the country's fuel demand after two and a half months unless the government raises fuel prices or immediately transfers cash to compensate them for losses. State-run firms are free to raise petrol prices, which they have increased a dozen times in the last 16 months. But they lose heavily on sales of kerosene and cooking gas, while diesel rates are lower than international levels.

POWER

Generation

Power PSU engineers blame Reliance Infra for delays in DVC's Raghunathpur thermal project

October 25, 2011. Power PSUs have blamed Reliance Infrastructure for delays in the setting up of Damodar Valley Corp's Raghunathpur thermal power project in West Bengal and demanded its blacklisting for alleged defects in the construction, while the company said that the issue has been resolved. All India Power Engineers Federation (AIPEF), a body that includes engineers from from DVC, has written to the Central Vigilance Commission (CVC), alleging that the defective construction at the 2x600 MW Raghunathpur power plant had delayed the project. The project is likely to be commissioned by March/April next year, one year behind schedule.

NTPC synchronises 2^nd 500 MW unit of Jhajjar power plant

October 22, 2011. NTPC has synchronised the second 500 MW unit of its super thermal power project in Jhajjar, Haryana. NTPC said that another 500 MW unit of Indira Gandhi Super Thermal Power Project (IGSTPP) was synchronised.

The first 500 MW unit is already under operation. IGSTPP is a project of Aravali Power Company Pvt Ltd (APCL) -- a joint venture company of NTPC, HPGCL (Haryana) and IPGCL (Delhi).

Bawana power plant comes to life, generates 220 MW during trial run

October 21, 2011. Delhi’s first power generation plant in more than a decade at Bawana in Outer Delhi began operations on a trial basis when it produced nearly 220 megawatts of electricity. This, at a time when the city is facing major power shortage, leading to long outages. Operations at the Pragati-III power plant on its first day were smooth and the electricity it generated was successfully integrated with the Northern Grid. Delhi, so far, locally generates only about a fourth of its average daily power requirement of nearly 4,000 megawatts, and the Bawana plant is expected to reduce its dependence on other states for its electricity needs. The Central government allocated gas supply for the plant which had been ready for operations but had been waiting for the fuel. The plant produced nearly 220 megawatts of electricity and is expected to start generating up to 750 megawatts as gas supply increases.

Transmission / Distribution / Trade

Plan panel sets up committee to revive power distribution

October 24, 2011. To revive the country's power distribution sector, which is reeling under huge losses, the Planning Commission has set up a committee headed by B K Chaturvedi to help restore the financial health of the utilities.

The Committee also comprises representatives from the Ministry of Finance, the Reserve Bank of India and officials from the state governments. It would prepare a report in the next 6 months, before the start of the 12th Five Year Plan Period (2012-17), so that the suggestions can be incorporated in it.

Finance Minister Pranab Mukherjee, had asked the states to raise electricity charges to improve the financial health of power distribution companies. They are facing difficulty in raising fund from banks on account of poor balance sheets.

Some of the distribution firms have not raised tariffs for 10 years and their total losses are estimated to be ` 70,000 crore. Meanwhile, the Ministry of Power has proposed that the state governments would consider converting loans due from them to the distribution utilities as state government equity to ensure capital infusion and improvement in net worth of the utility.

The state governments would have to ensure that the accounts of the utilities are audited up to the year 2009-10 and the accounts of a financial year are audited by September, of the next financial year (2010-11). Power Ministry has set a target of adding 1,00,000 MW of electricity during the 12th plan period.

Areva T&D bags ` 4 bn order

October 24, 2011. Areva T&D India Ltd said its transmission business, now a part of Alstom Grid, has bagged a ` 400 crore contract from Rajasthan Rajya Vidyut Prasaran Nigam Ltd. Areva T&D India will design and build a 765 kV turnkey substation including extra high voltage transformers and reactors at Anta near Kota.

The scope of this contract also includes a long term maintenance contract for the substation. This substation in Rajasthan would improve power transfer capacity and reliability of the electrical network through power transmission from several generation plants located in the state.

The products for this substation would be delivered from Areva T&D India's factories located at Vadodara, Padappai, Pallavaram, Hosur and Noida. Areva T&D India has won 15 out of 32 orders for 765 kV substations in the country.

Rising tariffs force power cos to shun imported coal

October 20, 2011. Tariff of coal-based power projects has quadrupled in the past six months, compelling power-generating companies to stop burning costlier imported coal. As a result, the imported coal the power-generating companies contracted this fiscal is piling up at ports, ironically at a time when the country is facing an acute shortage of the fuel.

Retail tariffs may increase many-fold if distribution companies are allowed to pass on the price hike to consumers. Cost of generating electricity at NTPC's Farakka project in West Bengal rose to 5.50 per unit about a month ago. Its stations at Kahalgaon in Bihar, Dadri in Uttar Pradesh and Simhadri in Andhra Pradesh are generating electricity at 4-4.50 per unit. The power would cost around 6.50- 7 per unit to distribution companies. For these projects, the variable cost - mainly fuel and transportation expenses - rose to 3.9 per unit in September from 0.70. The state-run firm accounts for almost 70% of coal-based power produced in the country.

Policy / Performance

Coal ministry constantly monitoring supply to power projects

October 25, 2011. The government said it was constantly monitoring coal supply and stock position at power plants. The coal ministry said a total of 181 coal rakes were dispatched to consumers, of which 147 rakes went to the power sector. In addition seven rakes and another 1, 77,000 tonnes of coal was dispatched through merry-go-round and exclusive transportation ties ups. The overall average rail loading from Coal India Ltd sources was 156 rakes per day, of which 127 rakes per day were dispatched to the power stations. The ministry said coal stock position in power stations in northern India is also being continuously reviewed. Average loading to these stations during the current month has been 43 rakes per day. A total of 53 rakes were dispatched, of which 26 rakes were dispatched to Uttar Pradesh, nine to Rajasthan, eight to Haryana, seven to Delhi and three to Punjab power stations. During the last three days alone, a total of 146 rakes have been dispatched to the power stations in northern India.

Kerala, Orissa to join hands to set up power plant

October 25, 2011. In a joint initiative, Kerala and Orissa have firmed plans to set up a 2,000 MW thermal plant in Orissa, sourcing coal from Baitharani fields in the state. The proposal would be taken up for the formal approval of the two governments soon. The Centre had earlier allotted Kerala, Orissa and Gujarat to prospect coal equivalent to 3,000 MW each for the three states from the Baitharani fields. Initially, Kerala had thought about setting up a thermal plant in Kasargode district by bringing its share of coal but that plan had to be dropped due to local resistance. Later, the state also considered the idea of building a plant jointly with the NTPC but that also did not work out. It was against this backdrop that the idea of a joint initiative by Kerala and Orissa was mooted. To start with, the two states would form a Special Purpose Vehicle (SPV) for implementing the project, estimated to involve a cost of ` 8,000 crore when completed in three phases of 650 MW each. The power generated by the plant would be equally shared by the two states, which was expected to make up power crunch faced by them and meet the growing future needs.

Govt initiates action against Prakash Ind; Monnet Ispat & Sunflag under scanner

October 24, 2011. Faced with severe coal shortage and closure of power plants, the government plans to cancel coal blocks allotted to companies that are selling the scarce resource in the black market or indulging in illegal mining. It is probing alleged malpractices by various companies and has initiated action against Prakash Industries, which has interests in steel, power and mines. The company denies the charges, saying it is being framed by rivals who had furnished forged documents. Authorities are also scrutinising the activities of other companies, such as Monnet Ispat & Energy and Sunflag Iron & Steel Company, but have not yet detected any malpractices there. Industry experts said coal prices in black markets have skyrocketed as its deficit in the country has widened to around 140 million tonnes. Coal India was about 20 million tonnes short of its target at the end of September.

Coal India increases supplies to power cos by 28 pc post Oct 10

October 22, 2011. With a view to improve power supplies ahead of Diwali, state-run Coal India has increased despatches of the dry fuel to power utilities by 28 per cent from October 10.

The country's largest coal miner said that on an average, 0.85 million tonnes (MT) per day of coal were dispatched to power utilities during October 11 to October 20 vis-a-vis 0.66 MT per day of supplies witnessed during the first ten days of the month. Overall coal offtake too was stepped up during the said period to 1.17 MTs per day compared to 0.89 MTs during the first ten days of the month registering a growth of 30.8 per cent.

While exuding confidence that supplies will improve further in the remaining period of the month, the company said that it hopes to continue the upward trend next month onwards. The company said it has also ramped up coal production from October 11, 2011 onwards and during October 11-20, the production averaged 1.13 MTs per day compared to 0.95 MTs during 1-10 October 2011.

Prime Minister likely to review coal supply situation in November

October 20, 2011. With severe coal shortages disrupting power supply in different parts of the country, Prime Minister Manmohan Singh is likely to take stock of the supply situation next month.

The meeting assumes significance as the country is facing a severe shortage of coal for power generation activities and the Coal Ministry made it clear that it cannot supply domestic fuel to new projects, which will have to depend on imported coal.

Power projects having a total capacity of 80,000 MW are under construction in the country, but coal linkages for upcoming plants having a combined capacity of 40,000 MW are yet to be obtained.

In the first seven months of the current fiscal, decisions on more than 100 proposals for coal linkages from various sectors, including power, were still pending with the Coal Ministry. Of the 117 applications received in the January-July, 2011, period, the maximum requests were for captive power plants, followed by state electricity boards and independent power producers, sponge iron and cement plants.

Power traders at risk from discoms: Fitch

October 20, 2011. The poor financial health of state electricity boards could pose significant business risks for power traders in the country, says rating agency Fitch.

Fitch Ratings said the credit risk of power traders has become "riskier" due to profitability and liquidity constraints faced by state power utilities. This could lead investors in power trading companies to either seek higher return on the investments or seek alternate avenues for investment.

Leading power traders include PTC India and Tata Power Trading Company. Going by estimates, over the past four years, the top five trading licensees have controlled over 80 per cent of the market in terms of volumes. Some of the large loss making state power utilities come from the states for Tamil Nadu, Uttar Pradesh, Madhya Pradesh. These are also largest buyers of short-term electricity through power traders, Fitch Ratings said. As per Planning Commission's estimates, electricity distribution losses totalled a whopping ` 70,000 crore in 2010-11. According to Fitch, the biggest short-term buyers – SPUs in Tamil Nadu and Rajasthan -- face huge energy deficits with largest cash losses on a revenue and subsidy-realised basis.

Corruption, inefficiency eat 25 pc of CIL output: Sriprakash Jaiswal

October 19, 2011. Corruption, inefficiency and low productivity have eaten up at least a quarter of the output of state monopoly Coal India, putting pressure on supplies, but output is poised to rise as mines have started getting environmental clearances, Coal Minister Sriprakash Jaiswal said.

Jaiswal assured power consumers that coal shortage, which has crippled many power plants, would soon be resolved as emergency measures to dispatch coal to fuel-starved power stations would build stocks and make sure there are no blackouts on Diwali. He also said the government wanted to ensure good returns for Coal India shareholders but he is also willing to contribute ` 25,000 crore from the company's kitty to help fund crucial government expenditure.

The minister's immediate concern is the coal shortage situation, which still looks wobbly. Latest data from the Central Electricity Authority shows average coal stocks at 86 power projects are enough to fire the plants for only seven days as on October 16, down from eight days on October 13. Stocks at Delhi's Rajghat plant are zero.

The shortage, which has forced many large plants to shut down, seems unlikely to recur. Jaiswal said the scarcity was caused by an unprecedented combination of factors. Torrential rains had turned many opencast mines into vast lakes, damaged equipment, and drenched heaps of coal waiting to be transported. Also, strikes by miners and blockades by pro-Telangana agitators magnified the problem.

India's coal output is poised to grow gradually as the ministry cracks the whip on rampant malpractices in state monopoly Coal India Ltd, which provides 82% of India's coal. Coal output can rise another 10-15% with higher productivity, which can be achieved with better staff morale, the minister said.

INTERNATIONAL

OIL & GAS

Upstream

Zimbabwe Power Utility to explore for gas in Lupane

October 25, 2011. The Zimbabwe Power Co. will spend $12 million exploring for gas in the western district of Lupane. The state-owned power company plans to drill five wells, each capable of producing about 5 megawatts of electricity. Zimbabwe has reserves of about 27 trillion cubic feet (765 billion cubic meters) of methane. The Zimbabwe Power Co. is a unit of state-owned Zesa Holdings (Pvt) Ltd., Zimbabwe’s electricity utility.

Chevron starts gas output at $3.1 bn Thailand Platong II project

October 24, 2011. Chevron's Thailand unit has started natural gas production from the $3.1 billion Platong II project in the Gulf of Thailand. This will increase Thailand's domestic production by more than 10% and boost Chevron's net natural gas output from the Gulf of Thailand, where it has been operating for 30 years, by more than 20%. Platong II, in shallow water 200 kilometers from Thailand's southern coast, has a maximum processing capacity of 420 mmscf/d. It is also expected to produce 18,000 barrels a day of natural gas liquids. Chevron recently agreed with Thailand's Ministry of Energy to increase its overall contracted quantity of natural gas by 500 mmscf/d to 1.2 billion by 2012 from company-operated offshore blocks 10, 11, 12 and 13. Platong II is likely to be a major source for this. California-based Chevron originally planned to start commercial gas production at Platong II in 2012, but this was brought forward to meet rising energy demand in Thailand. Chevron's Thai subsidiary is the operator and holds a 69.8% stake in Platong II. Other shareholders are Mitsui Oil Exploration Co., with 27.4%, and PTT Exploration & Production PCL, with 2.8%. Apart from gas, in 2010 Chevron produced 70,000 barrels of crude oil and condensate in Thailand. Chevron can supply an additional 170 mmscf/d of gas next year to PTT by ramping up capacity at existing gas fields in Thailand. Chevron still hopes to make an investment decision by the end of 2011 on a big Vietnam gas project and is awaiting government approvals for an offshore project in Cambodia, where it has drilled three successful wells. The company plans before the end of December to start drilling its first southern China exploration well, some 300 kilometers from Hong Kong, in one of three offshore China blocks it acquired from Devon Energy in 2010. Other major Chevron projects in Asia include the joint development of a block covering nearly 2,000 square kilometers in Chuandongbei in central China and the offshore Indonesia Gendalo-Gehem project which Chevron previously costed at between $6 billion and $8 billion.

Qaddafi demise will expedite Libyan crude output

October 21, 2011. The death of former Libyan leader Muammar Qaddafi in his home town of Sirte will expedite the nation’s efforts to revive crude output to normal levels. The fall of Sirte, located along the main highway linking the eastern and western regions, will allow oil workers and engineers back to the fields. Libya, holder of Africa’s biggest crude reserves, seeks to restore production to about 1.7 million barrels a day within 15 months, after output dwindled to almost nothing amid the rebellion that broke out in February. The collapse in exports contributed to prices rallying as much as 34 percent in London earlier this year and prompted the International Energy Agency to announce in June a global release of emergency stockpiles for the third time in the agency’s history.

Occidental’s oil output may decline on delayed California drilling permits

October 20, 2011. Occidental Petroleum Corp.’s oil and natural-gas output may fall this year for the first time since 2005 because it can’t get the permits it needs for new drilling projects in California.

Occidental, the biggest onshore oil producer in the continental U.S., is being hurt by a slowdown in approvals in the state, clouding an optimistic forecast five months ago. California’s Division of Oil, Gas and Geothermal Resources has granted 14 permits essential to new drilling projects this year out of 199 applications received, compared with 27 out of 100 in 2010 and 37 out of 52 the year before that.

Transportation / Trade

Nebraska governor to call session on Keystone pipeline

October 25, 2011. Nebraska Governor will call a special session of the state legislature over TransCanada Corp's proposed $7 billion oil sands pipeline that would cross ecologically sensitive areas. Nebraska Governor wants TransCanada to change the route of the Canada-to-Texas Keystone XL pipeline away from Nebraska's Sand Hills region, which sits atop the Ogallala Aquifer, one of the largest sources of water for farms in the central United States. If Nebraska succeeds in changing the route for the pipeline, it could delay the project. The session in Nebraska's only legislative chamber will determine whether the state can determine the siting of pipelines within its borders. The pipeline would take oil sands crude from Alberta to Gulf Coast refineries, and potentially to its ports for export. TransCanada has said it is too late in the federal approval process to move the proposed path for the line. The U.S. State Department hopes to decide whether to greenlight the 700,000-barrels-per-day or more pipeline.

Commodity-speculation limits approved in 3-2 vote by U.S. regulator CFTC

October 19, 2011. The top U.S. derivatives regulators voted 3 to 2 to curb trading in oil, wheat, gold and other commodities after a boom in raw-materials speculation, record- high prices and years of debate and delay. The rule has been among the most controversial provisions of the Dodd-Frank financial overhaul, enacted last year, which gave the Commodity Futures Trading Commission (CFTC) the authority to limit trading in over-the-counter commodity swaps as well as exchange-traded futures. The rule will limit the number of contracts a single firm can hold. The rule limits traders to 25 percent of deliverable supply in the month nearest to delivery. The spot-month limits apply separately to physically settled and cash-settled contracts. Deliverable supply will be determined by the CFTC in conjunction with the exchanges. Cash-settled natural gas contracts will be subject to a different regime. Traders will be permitted to hold contracts equal to five times deliverable supply in Henry Hub swaps, derivatives that settle in cash instead of the delivery of the underlying commodity. Henry Hub is a natural gas delivery point in Erath, Louisiana, and the benchmark for U.S. futures.

Policy / Performance

Hedge funds hike bullish commodity bets

October 25, 2011. Hedge funds increased bullish bets on commodities by the most since August on mounting optimism the global economy will avoid another recession, boosting prospects for raw-materials demand. Money managers raised combined net-long positions across 18 U.S. futures and options by 12 percent to 737,647 contracts in the week ended Oct. 18. Wagers increased most in energy and agriculture, led by heating oil, gasoline, coffee and soybeans.

Kuwait pumped 2.9 million barrels a day of oil in September

October 23, 2011. Kuwait, the fifth-largest producer in OPEC, pumped 2.9 million barrels a day of crude in September and sees current prices as reasonable for exporters and importers. The Organization of Petroleum Exporting Countries will consider altering output in response to an increase in Libyan production when it meets next in December.

N.Y. gas drillers' victory soured by tough new rules

October 22, 2011. The end of a drilling ban in New York was meant to be a new dawn for energy companies. After years of waiting, they would finally be able to exploit the richest deposit of natural gas in the country. But as companies delve into new regulations for drilling in New York, they're discovering a bitter reality: half the land they had leased for drilling may now be out of bounds. In proposed new rules for drilling, which are expected to be finalized early next year, the state has imposed an off-limits buffer around its waterways due to environmental concerns about the effects that drilling will have on water supplies.

Alberta: EU oil sands ranking threatens ties

October 22, 2011. The government of Alberta, home to the bulk of Canada's oil sands, has written to EU experts voicing "grave concerns" that the bloc's plans to rank unconventional oil as a highly polluting fuel are unfair and a potential threat to trade ties. With the letter, the provincial government joins Ottawa and the oil industry in a Canadian full-court press to sway the European Union away from labeling one of the country's most lucrative exports as inherently dirty. Canada exports no oil sands-derived crude to Europe, but government and industry officials worry that tagging the supply as much more carbon-intensive than other crudes could set a costly precedent for current or potential markets.

BP wins U.S. approval for first drilling plan since Macondo

October 21, 2011. BP Plc received U.S. permission for oil exploration in the deep waters of the Gulf of Mexico, the first approval since the company’s Macondo well caused the nation’s worst offshore spill last year. The company must obtain a permit before drilling begins in a field about 192 miles off the Louisiana coast.

Proposal to kill ethanol pump aid dies in Senate

October 20, 2011. A proposal that would have stopped subsidies for new gas station pumps to boost ethanol sales failed to make it into the Senate's version of the U.S. Agriculture Department's fiscal 2012 budget. The measure, proposed by Senator John McCain as a way to trim federal spending, would have prevented the USDA from offering grants and loans for rural gas stations to install "blender pumps." The pumps let consumers to blend gasoline with up to 85 percent (E85) ethanol for cars designed to handle the higher levels. But McCain withdrew his amendment before the Senate could vote on whether to attach it to the agriculture appropriations bill.

POWER

Generation

Developer dumps UK waste power plant

October 24, 2011. A UK subsidiary of U.S. energy-from-waste company Covanta Holding Corp. has scrapped plans to build a 400 million pound waste-fired power plant in Wales, which would have created 100 full-time jobs. The Brig y Cwm power plant would have collected 750,000 tonnes of non-recyclable household and business waste from the southern Wales area per year and was expected to have a power production capacity of 67 megawatts (MW), enough to power two local county boroughs. Covanta Energy decided to drop the project after local Welsh authorities decided to sell non-recyclable waste to smaller facilities across the country, rather than one large station.

U.N. report seen worsening fear over Iran nuclear plans

October 24, 2011. The U.N. nuclear watchdog is expected to publish intelligence soon pointing to military dimensions to Iran's nuclear activities but stopping short of saying explicitly that Tehran is trying to build atom bombs. Russian and Chinese reluctance may frustrate any Western bid to seize on next month's report by the U.N. International Atomic Energy Agency (IAEA) to press for expanded United Nations sanctions on Iran, a major oil producer.

Japanese nuclear plant survived tsunami, offers clues

October 20, 2011. When the 13-meter (40-foot) tsunami that wrecked Japan's Fukushima nuclear plant hit Onagawa to the northeast, hundreds of residents found refuge at the local nuclear plant, rather than run the other way.

At Fukushima, the tsunami knocked out power supply and its cooling system, triggering reactor meltdowns and forcing 80,000 to evacuate in the world's worst nuclear accident in 25 years. The Onagawa plant, in contrast, shut down safely and its gym served for three months as a shelter for those made homeless.

Policy / Performance

China-IAEA deal on safe construction of nuke power plants

October 25, 2011. The International Atomic Energy Agency (IAEA) has signed a practical arrangement deal with China on cooperation in the field of safe nuclear power plant construction in that country. The arrangement provides for stronger collaboration with the U.N. nuclear watchdog and China's International Construction Training Center (ICTC) to ensure the safe construction of new nuclear power plants. China has an active nuclear power program with 15 nuclear plants in operation, and 27 new ones under construction. Currently, nuclear energy accounts for 1.82 percent of China's total electricity generation.

Renewable Energy / Climate Change Trends

National

Mahindra to enter solar energy

October 22, 2011. The $12.5 billion Mahindra group is diversifying into solar energy through its in-house private equity arm Mahindra Partners. The solar business, part of Mahindra's Clean Tech vertical, will be involved in on-grid solar plants, off-grid or captive solar plants, solar power products and EPC contracts. Mahindra Solar has already bagged a 5MW project in Rajasthan which will be up and running by January 2012. It will also bid for projects in states like Gujarat, Rajasthan and Karnataka, which are taking the lead in solar energy under the National Solar Mission. The solar business will look for private equity participation once it goes beyond what the company calls the "testing and incubation" stage. Mahindra Clean Tech is also interested in getting into water treatment and water management as well as energy efficiency as business opportunities under the Clean Tech vertical. Mahindra Solar will have three different business lines. It will have an on-grid business which will contribute power to the grid. It will also have an off-grid business for captive solar plants as well as a solar power product line. Besides it will undertake EPC (engineering, procurement and construction) contracts to build solar power plants.

Greenpeace called upon UP govt to demand a bigger share of decentralised renewable energy

October 21, 2011. In the backdrop of the upcoming National Development council (NDC) meeting, Greenpeace has called upon the Uttra Pradesh government to demand a bigger share of decentralised renewable energy (DRE) under the flagship Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY). Greenpeace also released its national report on RGGVY highlighting how the scheme has failed to meet its objectives. The report is a compilation of social audits, public hearings and consultations of RGGVY conducted in Uttar Pradesh, Bihar and Andhra Pradesh to understand if the scheme has been able to meet its stated mandate and its socio economic impact on the rural populace. The report points out that localised generation and supply of power through renewable energy is crucial for ensuring electricity access in Uttar Pradesh. UP has been reeling under a power crisis and has been forced to buy power at rates as high as ` 17 per unit from the central pool to ensure adequate supply in the state.

Global

Water use rising faster than world population

October 25, 2011. Like oil in the 20th century, water could well be the essential commodity on which the 21st century will turn. Human beings have depended on access to water since the earliest days of civilization, but with 7 billion people on the planet as of October 31, exponentially expanding urbanization and development are driving demand like never before. Water use has been growing at more than twice the rate of population increase in the last century. Water use is predicted to increase by 50 percent between 2007 and 2025 in developing countries and 18 percent in developed ones, with much of the increased use in the poorest countries with more and more people moving from rural areas to cities.

Solar industry’s ‘uncertainties’ lead meyer burger to cut output

October 25, 2011. Meyer Burger Technology AG, Europe’s biggest solar-panel equipment maker, said it would temporarily halt output at its MB Wafertec unit in Switzerland amid “high uncertainties” within the solar industry. Production at the wafer machinery plant in Thun will be halted for as many as three weeks in November and may be adjusted again in December as wafer, cell and panel producers delay investments in new machinery amid low demand for their products.

Tepco to sell 20 pc stake in wind power unit to Toyota Tsusho

October 25, 2011. Tokyo Electric Power Co. will sell shares in a wind power company for about 20 billion yen ($263 million), its first significant asset sale to pay for compensation claims after the Fukushima nuclear disaster. Tepco, as the company is called, will sell a 20 percent stake in Eurus Energy Holdings Corp. to Toyota Tsusho Corp. by January. After completion of the sale, Toyota Tsusho will own 60 percent of Japan’s biggest wind-farm operator while Tepco will hold the rest. The sale is Tepco’s biggest since the triple meltdowns at its Fukushima Dai-Ichi nuclear plant exposed it to as much as 4.5 trillion yen of compensation payments by March 2013. Tepco can sell assets worth 707.4 billion yen within three years, one of the conditions for receiving state support.

US House votes to ban airline compliance with EU law

October 25, 2011. Passenger and cargo airlines would be shielded from a European law making carriers worldwide pay for carbon emissions under legislation approved by the House of Representatives. Lawmakers sent a strong message to the European Union on its unilateral action, fiercely opposed by carriers, travel groups, labor and a number of countries, including China.

SolarReserve receives $27 mn from stock sale to ACS Cobra

October 25, 2011. SolarReserve Inc., a closely held developer of solar-thermal power plants, received $27 million in a sale of Series D preferred stock. ACS Cobra, a unit of Madrid-based construction company ACS Group, was the only investor in the deal and has taken a “small, minority position” in SolarReserve. The Santa Monica, California-based company disclosed the funding in a filing with the U.S. Securities and Exchange Commission. It will be used for general corporate purposes. ACS Cobra also is building and providing equity for SolarReserve’s 110-megawatt Crescent Dunes project near Tonopah, Nevada. The plant is also funded with equity from Banco Santander SA and $737 million in debt financing that carries a partial guarantee from the U.S. Department of Energy. It is expected to enter operation in late 2013 and will provide power for utility NV Energy Inc. for 25 years. SolarReserve has raised a total of $187 million through equity offerings.

UK carbon capture projects unlikely by 2020: MPs

October 25, 2011. Britain is unlikely to see commercial carbon-capture and storage (CCS) projects by 2020 and the government should devise a plan on how to reach climate targets by the end of the decade if CCS is not delivered. Britain plans to cut its greenhouse gas emissions by 34 percent below 1990 levels by 2020 and CCS technology fitted to carbon-intensive coal plants is considered key to reaching this target. But a British government decision to withdrawn funding for the country's first and most advanced CCS project at Longannet in Scotland has underscored critics' doubts that the expensive technology can reach commercial scale by the end of the decade. The group urged the government to immediately draw up plans on the impact of a lack of CCS technology on Britain's climate targets. The MPs also asked the government to commission a report into the consequences on climate targets of leaving unabated gas-fired power plants running during the 2020s. The government said it had dropped funding for the Longannet CCS project but that the one billion pounds in subsidies would be dedicated to a different CCS project. Britain's leading trade union body warned the country must step up investment in clean coal or risk losing jobs and jeopardizing chances to lead global CCS development. Britain also needs to double gas storage capacity by 2020 to ease exposure to supply interruptions and price spikes, the report said. The country currently has storage capacity to cover 14 days' worth of gas supply, compared with 87 in France, 69 in Germany and 59 in Italy.

Commerzbank cuts EU CO₂ price forecasts

October 24, 2011. Commerzbank lowered its year-end and 2012 forecasts for prices of EU carbon permits due to slowing growth prospects and a glut of supply in the EU emissions trading scheme (ETS). The Frankfurt-headquartered bank predicted prices for carbon permits called EU Allowances (EUAs) at 12 euros ($16.68) per tonne at the end of 2011, down two euros from the bank's previous estimate made at the end of August.

Italy, Serbia agree renewable power feed-in tariffs

October 24, 2011. Serbia and Italy have agreed feed-in tariffs for electricity produced from renewable sources in the Balkan country. The deal will guarantee Serbia the price of 155 euros ($215.4) per megawatt hour and be signed in Rome. Serbia and Italy signed wider energy deals in 2009 and earlier this year worth a total 1.1 billion euros ($1.5 billion) to boost the share of renewables in their energy output and alleviate shortages. Serbia's state-run utility EPS and Italy's company Seci Energia will jointly build three hydropower plants worth about 819 million euros and with a combined capacity of 365 megawatts on the Drina river, just outside Bosnia, by 2014. The 2009 deal envisions construction worth 300 million euros to build 10 small hydropower plants on the Ibar river in Serbia's southwest with a combined capacity of 103.2 MW. The electricity will be exported to Italy via Montenegro and an underwater cable across the Adriatic Sea. The plants on the Drina and Ibar rivers will help Italy derive 17 percent of its power consumption from renewable sources by 2020.

EU should focus CDM incentive on renewable power, De Boer says

October 24, 2011. The European Union should rethink its plan to restrict use of emission credits from the world’s biggest greenhouse-gas offsetting program, said a former United Nations’ chief climate official. De Boer was speaking in London after Clean Development Mechanism offsets dropped to a record 6.69 euros ($9.28) a metric ton on Oct. 20. A record number of emission-reduction projects are seeking registration by the end of next year, boosting supply because of a deadline imposed by the EU, whose factories and power stations are the main buyers of credits. From 2013 the EU will accept only new offset projects based in least-developed countries. Additionally, the import of credits generated by reducing industrial gas hydrofluorocarbon- 23 and of those tied to some nitrous-oxide projects will be banned as of May 2013. The EU rules should “focus on renewable energy access in countries that don’t have access at the moment,” ensuring the world’s poorest people in emerging nations including India would get access to green power rather than electricity from fossil fuels, he said. The CDM has “proven it’s flourished in larger economies and for larger projects,” de Boer said. There is insufficient scope to curb emissions in least-developed nations, he said. A record of at least 592 projects entered the validation stage of the CDM program in the three months ended September, about 14 percent of all projects seeking registration under the program of the 1997 Kyoto Protocol. Almost 3,000 projects have been approved since the program started. China is the biggest supplier of credits. The EU market, including UN offset credits, is oversupplied by 9.3 percent in the five years through 2012. The model assumes actual emissions of 10.31 billion tons against a total cap of 10.65 billion tons. The use of 610 million tons of offset credits brings the net oversupply to 957 million tons.

China to assess energy consumption

October 23, 2011. China will start assessing energy consumption in local provinces and implement controls on consumption. Renewable energy use will be waived in the assessment, the report said.

Toyota to use locally made hybrid systems in China production

October 22, 2011. Toyota Motor Corp. aims to develop Chinese-made hybrid systems and start producing and selling cars featuring the systems through its two joint ventures in China around 2015.

China slams U.S. over solar complaint

October 22, 2011. China issued a harsh rebuke of an anti-dumping complaint filed by U.S. solar firms, warning the United States not to take protectionist measures that could harm the global economy. Seven U.S. solar manufacturers asked the Obama administration to impose duties of more than 100 percent on China solar imports, which they said were unfairly undercutting U.S. prices and destroying American jobs. The controversy comes at a sensitive time in U.S.-China trade relations, which are plagued by U.S. concerns over market access in China, Beijing's treatment of intellectual property rights, and raging debate over the value of China's currency. The United States was living in a glass house, having adopted its own policies to promote its domestic industry, China said.

Maryland Governor wants wind, solar power to compete with gas

October 22, 2011. Maryland Governor Martin O’Malley asked utility regulators who are soliciting bids to build 1,500 megawatts of new power plants to evaluate renewable energy projects and not restrict the process to natural gas. O’Malley urged regulators to require that proposed budgets for building and operating gas-fired plants include fuel costs, in a letter to the Maryland Public Service Commission. Regulators have requested bids only for gas plants and developers aren’t required to include the price of the fuel needed to run them. O’Malley, a Democrat, said this makes it difficult to make an “apples to apples” comparison with wind and solar projects. Maryland utility regulators said they would seek proposals for building power plants to meet increasing demand in the state. O’Malley also wants to lift a ban on utilities submitting bids. He asked the commission to permit utilities owned by Pepco Holdings Inc. and Baltimore-based Constellation Energy Group Inc. to submit bids for generation projects that they would build and operate. The governor is also seeking concessions from Exelon Corp., a Chicago-based utility holding company that’s pursuing a $7.9 billion takeover of Constellation, which operates Baltimore Gas & Electric Co., Maryland’s largest utility.

California approves carbon market rules

October 21, 2011. California regulators approved final regulations for a carbon market that is one of the biggest U.S. responses to climate change. The state believes the market for greenhouse gases, which starts in 2013, will let it address global warming in a low-cost way and become the center of alternative energy industries, like solar, although some businesses fear higher energy prices. The most populous U.S. state is moving ahead with the plan years after federal regulators rejected a similar idea for the nation, partly on concerns of the effect on businesses. The California Air Resources Board voted 8-0 to adopt the market regulations, which officials said are critical to the state's goal of cutting carbon emissions to 1990 levels by 2020 -- about a 22 percent reduction from forecasted business-as-usual output. Power companies and factories will be able to trade a gradually decreasing number of permits to emit carbon dioxide and other greenhouse gases under the so-called cap-and-trade plan, which counts on market forces leading companies to find the cheapest way to cut emissions. About 350 companies representing 600 California factories and oil refineries must begin complying with the program in 2013. By 2015, when transportation fuels are brought under the cap, the system will cover 85 percent of the California economy, the eighth largest in the world.

U.S. solar panel makers seek duties against China

October 20, 2011. American solar panel makers asked the U.S. government to impose stiff duties on Chinese-made solar energy products that they said unfairly undercut prices and destroy thousands of American jobs. The spat over solar panels, which comes even as the Obama administration faces criticism over its financial backing for bankrupt U.S. solar panel maker Solyndra, marks the latest irritant in relations between the world's two top economies.

Big business, investors urge tough climate action

October 20, 2011. U.N. climate talks in South Africa next month must make meaningful progress or governments "risk permanent damage to their credibility". Governments should try to adopt measures to ensure poor nations will have $100 billion in annual climate aid by 2020 and to pave the way for low-carbon investments.

Major emitting nations must also cut their carbon emissions deep enough to contain global warming. The companies also encouraged countries to forge bilateral and multilateral agreements to form financing partnerships and to tackle particular problem areas such as deforestation and emissions from international shipping and aviation.

Japan eyes renewable energy deregulation

October 20, 2011. Japanese cabinet ministers will call on the government to ease rules on building geothermal, wind and hydraulic power plants to boost renewable energy use after the Fukushima nuclear crisis.

The world's worst nuclear crisis in 25 years at the Fukushima Daiichi plant, triggered by a huge earthquake and tsunami in March, has heightened public safety concerns and kept 44 of Japan's 54 nuclear reactors off-line. Following the atomic disaster, Japan vowed to review from scratch the country's energy policy, which previously had aimed to rely on nuclear power for more than 50 percent of the country's electricity supply by 2030. A panel of cabinet ministers in charge of energy and environmental issues will make a 93-point list of recommendations to the government on cutting costs and saving time to build more renewable energy plants. For instance, it will recommend that rules over drilling of geothermal resources at national parks be relaxed and advise that special farming and forestry rules be set up to utilize unused farmland.

The panel will also recommend that the issuance of water rights permits be relaxed and that laws governing rivers and utilities be revised in order to increase the number of hydraulic plants once the recommendations are made, the government will aim to realize such deregulation steps during this fiscal year to March 31, 2012. The panel is due to meet to discuss deregulation and other issues such as the power supply outlook for this winter. Japan's previous Prime Minister, Naoto Kan, pledged to scrap nuclear power in the future and vowed to boost renewable energy to at least 20 percent of the country's electricity supply in the 2020s. Various types of renewable energy account for about 10 percent of Japan's power demand. Prime Minister Yoshihiko Noda who took over in September has acknowledged that public safety concerns will make it tough to build new reactors, but has stopped short of saying atomic power would play no role at all by 2050.

U.S. certifies 107 Brazilian sugar-cane mills to export ethanol

October 20, 2011. Sugar-cane processors in Brazil, including Bunge Ltd. and Louis Dreyfus SAS, are preparing to increase their ethanol exports to the U.S., where oil companies must expand their use of biofuels. Ethanol producers had registered 107 mills with the U.S. Environmental Protection Agency at the beginning of October, up from 55 in February.

The U.S. may increase its use of ethanol made from cane because it’s classified under the EPA’s Renewable Fuel Standard as an advanced biofuel and producing it generates less carbon- dioxide emissions than domestically produced corn ethanol, which is not labeled an advanced fuel. U.S. oil companies will be required to blend 36 billion gallons (136 billion liters) of biofuels with petroleum-based fuel in 2022, up from 14 billion this year, according to the EPA.

Solar market scouts for cash as subsidies fade

October 19, 2011. The sunset of two key U.S. subsidies has set the solar industry scrambling to keep the cash flowing to fund new renewable energy projects, and the outlook looks cloudy, according to industry experts. The U.S. solar industry is on pace to install a record 2 gigawatts of new installations this year, according to China's Suntech Power, more than double the 880 megawatts put on line in 2011 and well above earlier forecast of 1.5 to 1.6 GW. But a Department of Energy loan guarantee program that helped fund billions of dollars in solar installations expired at the end of the September, and another program that pays solar developers a cash grant of 30 percent of the cost of new projects will expire at the end of the year.

US Eximbank to lend Vietnam $1 bn to build wind-power plant

October 19, 2011. The U.S. Export-Import Bank signed an agreement with Vietnam Development Bank to lend the Southeast Asian country $1 billion to build a wind-power plant in the Mekong Delta area.

Nordex signs 250 MW turbine contracts for five Pakistan projects

October 19, 2011. Nordex SE signed supply and service contracts for N100/2500 turbines with a further four companies from Pakistan. The contracts will cover five projects of 20 turbines each, providing a total of 250 megawatts to the Pakistan grid.

Sugar shortages extend across Europe as global glut expands

October 19, 2011. At a time when the world is facing its biggest sugar glut in at least four years, trade barriers mean the European Union is contending with a second consecutive annual shortage. EU supply will fall 1.1 million tons short of demand in the 12 months ending in September, according to the Committee of European Sugar Users, whose members include Nestle SA (NESN), Unilever and Kraft Foods Inc. Global output will exceed usage by 5.32 million metric tons, Macquarie Group Ltd. predicts. As world sugar prices fell 23 percent in the past eight months, costs in the 27-nation bloc reached a two-year high. The EU, once the second-biggest sugar exporter, spent about 5.2 billion euros ($7.1 billion) since 2006 to shrink the industry after the World Trade Organization ruled it was dumping subsidized supply on world markets. At the same time, the bloc failed to scrap import duties, leaving users with the choice of either paying about 60 percent more than in the international market or shunning purchase and shuttering production.

Payom building its largest solar-power plant in Northern Germany

October 19, 201. Payom Solar AG, a developer of projects that generate power from the sun, started building its largest photovoltaic plant in the northern German state of Lower Saxony. The 4.4-megawatt plant in Oldenburg was financed with proceeds from the issuance of a corporate bond and will start operating before year-end. The company will also develop projects to be built in the first quarter of next year.

BYD to provide Samba Energy with solar panels and inverters

October 19, 2011. BYD Co. will provide New York-based Samba Energy with solar panels and inverters for use in installations in the U.S.

World Bank to fund small, clean-tech firms $60 mn

October 19, 2011. The World Bank group said it is launching a $60 million equity financing facility to help kick-start small companies that sell goods and services aimed at cutting greenhouse gas emissions in developing nations. A maximum investment of $10 million will be made in any one company, the International Finance Corporation.

Showa says full production at $1.2 bn solar plant delayed

October 19, 2011. Showa Shell Sekiyu K.K.’s $1.2 billion solar panel factory in Japan has delayed full production until the end of this year or early 2012. The factory, in southern Japan’s Miyazaki prefecture, will be able to produce 900 megawatts annually. That would make it the largest factory in the world making thin- film solar panels with copper-indium-gallium-selenide.

Dear Reader,

You may have received complimentary copies of the ORF Energy News Monitor. Our objective in bringing out the newsletter is to provide a platform for focused debate on India’s energy future. You could be a partner in this effort by becoming a subscriber. You could also contribute recommendations for India’s energy future in the form of brief insightful articles.

We look forward to receiving your patronage and support.

ORF Centre for Resources Management

ORF ENERGY

NEWS MONITOR

Sponsorship Form

Please fill in BLOCK LETTERS

· Commercial Sponsorship: Rs 15, 000 per annum

1 hard copy (52 issues) + soft copies by email as per list provided by sponsor

· Non Commercial/ Academic Sponsorship: Rs 2, 500 per annum

1 hard copy (52 issues) + soft copies by email as per list provided by sponsor

· Individual Sponsorship: Rs 1, 000 per annum

Soft copy only

Yes! I/we would like to receive copies of the weekly ORF Energy News Monitor for a period of ______year(s). I/we shall be entitled to one hard copy along with the option of soft copies to a list of e-mail addresses provided by me/us for the period specified.

Name……………………………Address…………….………………………Telephone……………………Fax………………….E-mail…………………

Please find enclosed cheque/Bank Draft No.........................dated …………………drawn at New Delhi for Rs.........……….favouring ‘Observer Research Foundation’

Please fill in this form and mail it with your remittance to

Mr. Vinod Kumar Tomar

ORF Centre for Resources Management

OBSERVER RESEARCH FOUNDATION

20 Rouse Avenue,

New Delhi - 110 002

Phone +91.11.4352 0020 extn 2120

Mobile: 9871417327

Fax: +91.11.4352 0003

E-mail: [email protected], [email protected]

Registered with the Registrar of News Paper for India under No. DELENG / 2004 / 13485

Published on behalf of Observer Research Foundation, 20 Rouse Avenue, New Delhi–110 002 and printed at Times Press, 910 Jatwara Street, Daryaganj, New Delhi–110 002.

Disclaimer: Information in this newsletter is for educational purposes only and has been compiled, adapted and edited from reliable sources. ORF does not accept any liability for errors therein. News material belongs to respective owners and is provided here for wider dissemination only. Sources will be provided on request.

Publisher: Baljit Kapoor Editor: Lydia Powell

Production team: Akhilesh Sati, Vinod Kumar Tomar

The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.

PREV NEXT

Related Search Terms

ENM ORF

MonitorsPublished on Oct 25, 2011

Downstream

Policy / Performance

Generation

Policy / Performance

Related Search Terms

Publications

Parallel licencing in electricity distribution in Mumbai: Muddle or model?

Energy

May 14, 2024

India and the Economic Meltdown: Challenges and Possible Responses

Indian Economy | Economics and Finance | Economic Reforms | Financial Markets

Apr 15, 2009

Essay Series

Long-form

Progammes & Centres

Location

About ORF

Engage

People

Energy News Monitor I Volume VIII, Issue 19

MonitorsPublished on Oct 25, 2011

Downstream

Policy / Performance

Generation

Policy / Performance

Related Search Terms

Publications

May 14, 2024

Indian Economy | Economics and Finance | Economic Reforms | Financial Markets

Apr 15, 2009