What about the right to energy? (part II) Lydia Powell, Observer Research Foundation Continued from last week (Volume X, Issue 5 at http://orfonline.org/cms/sites/orfonline/EnergyHomePage.html)
|
T |
he raging debate in the popular media over ‘who’ reduced poverty and ‘through what’ is entertaining but not enlightening. Poverty, like ‘sustainability’, is an idea that is defined and studied exclusively by the ‘non-practioners’. The mythical poverty-line that is at the centre of the debate is a statistical artefact created by the ‘non-poor’. Like all statistical artefacts it will be ‘beaten’ by the experts until it yields to their taste but that will neither produce ‘the truth’ nor will it create a neutral bench mark against which any social achievement can be measured.
Energy use patterns on the other hand offer a neutral and more convincing measure of ‘poverty’. In the post-industrial era, the inability to access and use modern energy services is a clear sign of poverty. Modern energy sources for lighting and cooking are a fundamental necessity for enhancing human capabilities. Only a pre-industrial society in which human capacity remains stunted, can continue to use traditional or non-commercial fuels to meet basic human needs. Modern fuels add to human capabilities; traditional fuels subtract from human capabilities. This was the secret of wealth generation during the industrial era. If we accept this premise, then we will have to acknowledge that roughly three-quarters of the Indian population is ‘poor’. This poor pre-industrial majority that lives amidst those of us who play with poverty lines sends its women and children out to collect firewood or prepare animal dung for burning rather than sending them to school. This is not a matter of taste and culture as many would like to believe; it is the outcome of our culture of ‘exclusive growth’. Inclusive growth will necessarily mean interventions.
|
|
Source: BP Statistical Review of World Energy June 2013 & World Bank
Take a few minutes to study the above chart (on page 2) which compares growth in energy consumption in India at the aggregate (national) level and per person energy consumption against those of countries / group of countries which started at roughly the same level in 1970. The per-person energy consumption of countries which are currently classified as high income non-OECD countries grew roughly five times faster than that of India from 1970 to 2012. They grew economically but that growth was shared with everyone as the per person energy consumption figure demonstrates. These are countries that are located in tropical regions and so their higher per person energy consumption is not the result of use of energy for space heating. Today, the per-person energy consumption of these economies is roughly ten times that of India. This is among many reasons why they are now high-income countries with enhanced human capabilities. India is far behind with only ‘dreams’ of becoming a middle income country some day (read the 12th plan!). In terms of per person energy consumption India just about managed to match levels of sub-Saharan Africa in 2010. What is interesting is that in the same period, rate of growth of India’s aggregate energy consumption was five times of rate of growth in India’s per person energy consumption. This highlights our preference for ‘exclusive growth’ that has ensured that neither growth nor energy trickles down to the masses to the extent necessary. This column will therefore have to award the conceptual round to Prof Sen and Dreze.
The second objection over the right to energy would be procedural. The delivery of the right to energy in any form requires elaborate infrastructure and human intervention and both are prone to imperfections. These imperfections could lead to leakages that will squander scarce capital resources and hold back energy access for the poor. The right to ‘subsidised energy’ that is currently in place has already created a system of leakages and rent extraction that benefits only the unintended. Using the existing system to ensure the ‘right to energy’ will therefore be a fatal mistake as Prof Arvind Subramanian has pointed out. In his commentary on India’s rights and entitlements approach, he asks why the Indian government cannot ensure that teachers turn up in rural schools rather than enacting a new right to education. The answer lies in politics rather than economics. The distribution of power within India’s federal system has meant that the federal government cannot always interfere with subjects such as education which are the exclusive preserve of the state governments. State governments have handed over the right of being absent to the teachers and the federal government cannot take it away easily especially when the federal government is a loose coalition. Reforming the existing system to take on a new responsibility would thus be far more difficult than introducing a new system. In this light the direct delivery of rights (in monetary form if that is easier) by the federal government could be the only option available. This column will therefore award the procedural round also to Prof Sen and Dreze.
The third objection would be financial. Offering the right to any resource is seen by many experts as economically unsustainable. From a purely economic perspective this is indeed correct. Given India’s fragile fiscal status, it can hardly be expected to take on an additional social responsibility. Poorly designed and delivered energy subsidies drain out close to 2 percent of GDP. Adding another scheme of interventions may not produce any of the desired social outcomes but it is very likely to shave off another percentage or two from the GDP. This is not insignificant enough to ignore. But the narrative on the cost of social interventions needs to be put in broader historical and political context.
While most western nations started functional democracies at a minimum per person income of roughly USD 2500, India showed the world that it is possible to maintain, sustain and strengthen a functional democracy at per capita income levels of USD 100 (at the time of independence). But this achievement remains a grossly flawed one because of India’s unforgivable failure in addressing mass poverty, inequality, destitution and discrimination. India’s inability to draw on is political success to create an economic democracy where the poor are given a sense of full participation in the economic life of the country as producers and consumers is partly on account of deteriorating State capacity and partly on account of India’s socially closed hierarchical system of caste adapting and manipulating emerging class inequalities to capture wealth in a society undergoing economic transformation.
As Arjun Appadurai eloquently summarizes:
“The first major structural fact that we need to understand about India is that 60 years of since India became an independent nation, the project of wealth creation has become radically unhinged from the project of poverty alleviation and social inclusion. India is now an unrelenting wealth producing machine where state politics and private enterprise have created a legal and economic framework in which the fetters to private enterprise and wealth accumulation have been radically weakened. The early socialist ideals of Nehru have given way to neo-liberal visions. The development state still exists in India but it is vast rent gathering apparatus which is there to assure that the poor are not in the way of massive capitalist development.”
There is sufficient evidence to show that this is not just elegant prose designed to combat the onslaught of neo-liberalism. Recent studies have found that 43 % of Indian billionaires accounting for 60% of billionaire wealth obtained their wealth from extractive (rent thick) industries. In his book ‘Fault Lines’ India’s chief economist Raghuram Rajan points out that India had the dubious distinction of being second only to Russia in terms of billionaires per trillion dollar GDP (before the financial crisis) which is not a tag that we can be proud of. There is fear even among the most liberal of economists that India may be evolving from a ‘socialist economy’ into a ‘capture economy’ under which public officials & politicians privately sell underprovided public goods and a range of rent generating advantages to private firms. A recent World Bank study on a set of capture economies in Eastern Europe showed that huge private benefits came at an enormous social cost of about 10% of GDP over 3 years. By some estimates India transfers roughly USD 100 billion in the form of resource ‘throw-aways’ (land, energy, spectrum etc), tax breaks, incentives and subsidies to the private sector. This is more than 5 % of India’s GDP. The accusation that India can ill afford social spending therefore needs to be unpacked carefully. The quarrel here is not between the middle class preference for markets and marginalised class preference for state as many would like to believe. The quarrel is over who has the right to state spoils? Even a small percentage of state spoils currently apportioned to the private sector would be sufficient for widespread social transformation. The question therefore is not whether India can afford social spending but rather whether it can afford social deterioration. Even the perverse argument that social deterioration, essentially poor quality of human labour, would come in the way of capitalist accumulation can be made to justify social spending. This column therefore has no choice but to award the economic round also to Prof Sen and Dreze.
The final point is the quest for economic growth is fundamentally a quest for power. But the economically and geo-politically enlightened classes in India often confuse between quantitative and qualitative power. Quantitative power is derived from numbers but qualitative power is derived from capabilities. Quantity cannot always substitute for quality. India’s so-called ‘economic power’ is quantitative. India’s per capita income of $1530 at market exchange rates ($3840 at PPP) is comparable to that of Ghana at $ 1550 which when qualified by a population of over 1.2 billion grows into an aggregate GDP of roughly $ 2 trillion (at market exchange rates) and puts India among the list of G 20 countries. Quantitative economic power is real but it is socially and politically unsustainable. Only qualitative power is sustainable and this cannot come without investment in enhancing human capabilities. Human capabilities cannot be enhanced without universal access to modern energy. Whether or not it is provided as a right or entitlement is immaterial; what matters is that it must be provided.
Views are those of the author
Author can be contacted at [email protected]
Data & charts are contributed by Akhilesh Sati & Dinesh Kumar Madhrey
POWER
Energizing the “Indian Power Sector”
Ashish Gupta, Observer Research Foundation
|
T |
he Indian power sector has entered into a new scenario of optimism complemented with some apprehension. Continuing concerns about the coal availability, financial constraints of state distribution utilities, land and environmental concerns coupled with lack of infrastructure issues have once again bubbled back. Apart from these, rising input costs are threatening the very viability of the new power projects. India’s energy sector which is dominated by coal has long had supply problems. Coal India’s continued struggle to keep pace with the demand on account of evacuation problems, unprecedented strikes, productivity issues, environmental concerns and continued opposition from renewable energy experts are a source of concern. In spite of all this, the Indian power sector still holds the confidence of many of its stakeholders. Leaving aside the short term picture, the medium and the long term appear to be optimistic. Therefore this column will highlight some of the measures that will have a positive impact and will create a win-win situation for the consumers and other players in the sector.
Energy Efficiency
· As a lot of stress has been placed on coal shortages, the discourse on energy efficiency has been sidelined. Energy efficiency is the best mechanism for mitigating power shortages and conserving energy. This is not gaining momentum because it is not complemented with stiff regulatory reforms. Good regulatory governance with proper execution will have a significant impact on the economics, business models and technology which will lead to better efficiency. In addition there is also the need to separate the roles of power producers, regulators and policy makers to bring better governance.
Smart grid Approach
· Though a westernized concept, smart grids could gain a foothold in the Indian power sector rapidly. Smart grids will allow power producers and the consuming centres to interact in real time in an automated fashion. Secondly, it can also help in managing the supply-demand mismatch by storing excess energy and making it available when required. Thirdly, it will be helpful in enabling better management of electricity at the consumer end as well as the grid. Fourthly, consumers will have better visibility and good control on the source and the amount of power being used. In spite of having so many benefits there are challenges impeding the implementation of the same:
o The absence of regulatory support with no clear cut policies
o Only pilot projects are planned with absence of full scale projects
o There is a national mandate but the progress is still very low
o Lack of investments by the government and the utility firms
o Seen as developed markets concept with no viability for Indian power sector
Consumer oriented Market Mechanism
· There is a need to introduce the vibrant retail market mechanism where the consumers will have increased bargaining power. Open access concept which was promoted five years back but it remains limited to paper excluding some big players. Retail consumers are at the receiving end and discoms are enjoying monopoly positions. None of the utilities want to forego their profit margin which they try to hide under continues demand for tariff hikes. As the retail power market evolves, a new set of entities and viable business models will emerge in the buying and selling sides. The time has come where the government must ensure that new era of the power sector will belong to the consumer rather than succumbing to inefficient power utilities.
Strict adherence to the Mandate
· The coal sector is plagued with problems and is in dire need of solutions to allay problems over energy security, protecting the public and the local environment. A responsible approach to coal use in power plants that supports economic growth and poverty alleviation is critical. Though there is a mandate for power plants to use washed coal when sourced from more than 500 km away, the rule continues to be flouted. The government must enforce the mandate with strict governance and penalty mechanism in order to strike a balance between power production, health of communities and the sustainable local environment.
Lack of funds and technical expertise
· Very often Indian power utilities are very conservative in their willingness to take on the risk in adopting new technology even if it is in use elsewhere. The major reasons behind this is the inability to raise finances from the market and the lack of technical expertise within financing institutions to understanding the know-how to assess capital requests for the technical upgradation. The Government could empower both power producers and financial institutions with risk taking ability through bundled offering of financial incentives and rewards for improved efficiency.
Revamping Rural electrification Program
· All the Planning documents outline the country’s economic goals focussed on poverty reduction and improved access to affordable energy. Needless to say none of the objectives have been achieved so far. In the rural electrification program, the major emphasis is on showing the number of villages being electrified rather than showing how many villages are getting reliable electricity supply. Rural households must not be left at the mercy of solar lamps. This necessitates rethinking on rural electrification program. Enhancing rural electrification with viable funding approach will ensure our country’s economic development.
Reducing Transmission & Distribution (T& D) losses
· Most of the power utilities are facing a financial crunch because they are unable to reduce T& D losses. Though many government reports highlight T& D loss reduction, this is far from reality. Some State Electricity Boards (SEBs) have performed well but the overall reduction in T& D losses is dismal. This lacuna is proving to be a boon for inefficient utilities to ask for revision in tariffs. Apart from this the routine influence of political parties ensures that the utilities remain sick. This practice needs to be changed!
Thus far, the Indian power sector has taken a conservative approach in responding to the above suggested measures. Though some utilities in Gujarat, Maharashtra and a few other states have taken positive steps most of them seem to be content with the wait and see approach. Cost management is still alien to many state electricity boards. Focussing on operational excellence will change the game for the power sector. Apart from these measures, the Indian power sector needs to become more customer focussed first by improving delivery capabilities. Granting open-access to customers is indispensable to reform of the sector. This is true not only for existing end users but also for developing value propositions to target emerging consumer segments. All the suggested measures will not only help in reviving the power sector but also facilitate the emergence of long term vision oriented power utilities.
Views are those of the author
Author can be contacted at [email protected]
DATA INSIGHT
India’s External Trade: Share of Oil
Akhilesh Sati, Observer Research Foundation
US$ billion
|
India's Merchandise Trade |
2011-12 (April-March) |
2012-13 (April-March) |
|
Exports |
306 |
300.6 |
|
Of which: Oil |
56 |
60 |
|
Non-oil |
249.9 |
240.6 |
|
Imports |
489.3 |
491.5 |
|
Of which: Oil |
155 |
169.4 |
|
Non-oil |
334.4 |
322.1 |
|
Trade Deficit |
-183.4 |
-190.9 |
|
Of which: Oil |
-98.9 |
-109.4 |
|
Non-oil |
-84.4 |
-81.6 |
Share of Oil in Total Imports (in Value terms)
Share of Oil in Exports (in Value terms)
Source: RBI Bulletin, July, 2013 (Vol LXVII Number 7)
NEWS BRIEF
NATIONAL
OIL & GAS
Upstream
RIL to invest $6.5 bn to regain lost glory of KG-D6
July 21, 2013. Reliance Industries Ltd (RIL) plans to invest $6.5 billion in its KG-D6 gas fields to re-attain natural gas production of up to 60 mmscmd by 2019-20 and regain the lost glory of the prolific block. The Bay of Bengal KG-D6 fields, which began gas production in April 2009, had hit a peak of 69.43 mmscmd in March 2010 before water and sand ingress led to shutting down of more than one-third of the wells. Current output is just over 14 mmscmd. While the company carries out remedial measures to augment production from the currently producing D1&D3 and MA fields, it plans to invest $3.155 billion in producing 20 mmscmd of gas from R-Series discoveries in the block and another $1.529 billion in four satellite fields to produce 10 mmscmd. Another $1.2 billion is planned to be invested in other discoveries in the block. The company will invest $747 million in augmenting production from D1&D3 and MA fields by putting up booster compressor and repair work at the closed wells. Besides $6.451 billion, another $6.151 billion is expected to be spent as operating expenses. These investments were besides the $7.572 billion the company has already sunk in development of D1&D3 and MA fields, $1.261 billion of operating expenses and $1.094 billion in exploring for oil and gas in the block. (economictimes.indiatimes.com)
Cairn India awards 3-D seismic contract to Russia's IG Seismic
July 19, 2013. Cairn India Ltd has awarded a two-year contract for a 3-dimensional seismic survey of its prolific Rajasthan oil block to Russian firm IG Seismic Services for an undisclosed sum. The Russian firm said it has signed a two-year contract for surveying the Barmer basin block. Cairn, which got government approval to restart exploration in the block, will use the 3-D seismic survey to locate newer oil and gas reserves and drill wells. Cairn, which holds 70 per cent in the Rajasthan block, had previously announced an investment of $2.4 billion in the block by 2015-16. It currently produces about 170,000 barrels of oil a day from the block. Oil and Natural Gas Corp (ONGC) holds the remaining 30 per cent interest in the block. (economictimes.indiatimes.com)
Bathinda refinery capacity to be increased to 11.3 mtpa
July 19, 2013. Guru Gobind Singh Bhatinda Refinery’s capacity will be increased to 11.3 million tonnes per annum (mtpa) to meet the increasing demand for petroleum products in North India. The refinery which was dedicated to the nation by the Prime Minister in April 2012, presently has a refining capacity of 9 mtpa. The expansion project which also includes integrated petrochemical stabilization, is estimated to cost ` 9,150 crore. Of this, ` 6,800 crore will be funded through debts from banks and financial institutions and the balance will come in as equity contribution by the promoters. The project is scheduled for completion in 2015-16. Engineers India is the project consultant for the project. (www.projectsmonitor.com)
Indian Oil restarting fire-hit secondary unit at Gujarat refinery
July 17, 2013. Indian Oil Corp is in the process of restarting a secondary unit at its 13.7 million tonnes a year Gujarat refinery at Koyali in western India after a fire, the company said. The fire occurred near the "flare knock out drum" of the refinery's sole gasoline-making 1.8 million tonnes a year fluid catalytic cracker (FCC) unit, the company said. The fire was put out in 10 minutes and one employee sustained a burn injury. The cause of the fire is being investigated. Other units at the Gujarat refinery were operating normally, the company said. (economictimes.indiatimes.com)
Transportation / Trade
LNG from US to cost GAIL India $10.5 per mmBtu
July 22, 2013. Liquefied natural gas (LNG) from the US will cost around $10.5 per million British thermal unit and will be the cheapest LNG to have been contracted ever by India. GAIL India Ltd had contracted to buy 3.5 million tonnes a year of super-cooled gas (LNG) from Cheniere Energy Partners LP for 20 years. The LNG price will be linked to a benchmark US price and included a fixed component. Gas at US Henry, LA is currently traded at around $3.78 per mmBtu. The LNG deliveries are expected to start in late 2016 or mid 2017 from Houston-based Cheniere's Sabine Pass LNG terminal in western Cameron Parish, Louisiana. GAIL's pact has an option to extend the agreement by 10 years. The price of gas compares to close to $13 per mmBtu that India will pay to RasGas of Qatar for buying 7.5 million tons per annum of LNG at oil price of $100. LNG on a similar long-term contract with Gorgon project of Australia will cost $16 when at Indian port. With domestic demand outstripping supplies by a wide margin, India's reliance on LNG, super-chilled for shipping by tanker, is bound to increase. Currently, domestic supplies of 105 million standard cubic metres per day will be able to meet just two-thirds of the demand. (economictimes.indiatimes.com)
BPCL pursuing plans to shift Tondiarpet terminal to Ennore
July 22, 2013. Bharat Petroleum Corporation Ltd (BPCL) is fast tracking plans for establishing a terminal in Ennore, an installation that will be a bigger, better alternative to its Tondiarpet facility. The plan and its early implementation have assumed significance in the light of a number of oil leaks allegedly from pipelines of the national oil companies in north Chennai in recent months. Following one such incident, the Central Pollution Control Board asked the company to stop operating three pipelines. BPCL said the company wants to move out of north Chennai. It is not alone in thinking on these lines as HPCL, which has a terminal in Tondiarpet, had set up a terminal near the Ennore port. One of the reasons for the marketing companies looking elsewhere and CPCL planning to replace the crude pipeline is the development of north Chennai. What once used to be area with very little inhabitation is choc-a-bloc now, IOC said. The number of buildings and densely-populated areas complicate things for the oil companies, be it in terms of moving their products by road or attending to leaks. BPCL had shifted nearly 80 per cent of the loading from Tondiarpet to Karur, which is connected by a pipeline from its refinery in Kochi. The facility in north Chennai is predominantly used to cater for petrol bunks in and around the city. It has also taken on lease tankages in Ennore. With the Ennore terminal, the company would explore the possibility of moving the products along the coast from Kochi, thereby also reducing product movement by road. (www.thehindu.com)
ONGC offers Azeri Light crude via tender for 1st time
July 19, 2013. ONGC Videsh offered a cargo of Azeri Light crude for the first time via a tender after it bought a stake in the field from Hess Corp. Hess Corp agreed to sell its 2.72 percent stake in the large Azeri, Chirag and Guneshli (ACG) group of oil fields in Azerbaijan as well as its 2.36 percent stake in an associated pipeline to ONGC for $1 billion. The transaction was completed in April, ONGC said. ONGC will have 3.5-4 cargoes each year to be exported from the Ceyhan terminal in Turkey while another two cargoes will be exported from Georgia's Black Sea port of Supsa via a joint-lifting arrangement. ONGC offered a 600,000-barrel cargo to be loaded on Aug. 29-31 from the Ceyhan terminal. The tender will close on July 25 while bids will stay valid until a day later. The BP-operated ACG oilfields are in the Caspian Sea around 100 kilometers east of Baku. (economictimes.indiatimes.com)
Policy / Performance
Moily assures action to check oil mixing with ground water
July 22, 2013. Petroleum Minister M Veerappa Moily assured action on complaints of oil mixing with ground water in some colonies in a north Chennai locality, following reports of leakage in pipelines of an oil marketing company. Residents of Tondiarpet had complained of seepage, with the state government asking oil companies to strengthen the pipelines. Oil companies had taken up cleaning up of wells and bore-wells in the area. Environment Minister Jayanthi Natarajan had assured action, including closure of the faulty pipeline. (economictimes.indiatimes.com)
EGoM meeting on fuel-starved power plants postponed
July 22, 2013. A meeting of the Empowered Group of Ministers (EGoM) which was to consider making available natural gas to fuel-starved power plants, has been postponed. At present, only a third of the 72 million standard cubic metres per day of gas requirement of the 18,713 MW gas-based power plants is being met. Another 8,000 MW capacity is almost ready for commission but there is no gas to fire the plants. The EGoM rejected a proposal to divert some of the 14 mmscmd of KG-D6 gas consumed by fertiliser plants to the power sector as it would result in shortage of urea during the busy crop season. The EGoM was to decide on making available gas from other sources to power plants. While options like gas from untied fields of ONGC are being explored, fertiliser ministry has been asked if it can spare any quantity that is unutilised in events like plant shutdowns, etc. The EGoM meeting was convened to consider abolishing the priority ranking in natural gas allocation so that the fuel currently consumed by urea plants can also be diverted to fuel-starved power plants. Currently, fertiliser plants consume all of the 14 million standard cubic metres per day of gas produced from Reliance Industries' eastern offshore KG-D6 fields. No gas flows to 25 power plants that had signed up for 29.74 mmscmd of KG-D6 gas. (economictimes.indiatimes.com)
India's oil reserves to last only for 20 years
July 22, 2013. India’s hydrocarbon output may not increase at a fast pace and bolster the country’s energy security. In both oil and gas, it is almost a hand-to-mouth existence for the country right now, data show. Roughly 80% of the country’s oil needs are already met through imports. India can produce oil only for the next 20 years going by the official estimate of its current recoverable reserves. The situation is not very different in the case of natural gas either. Gautam Sinha, head of department (production) at the upstream regulator Directorate General of Hydrocarbons (DGH), said this figure represents what in industry parlance is termed reserve to production ratio. That is, India held reserves of about 761 million tonnes (mt) in April 2012 at a production rate of 38 mt per year. India fares poorly not only against oil-rich regions like West Asia which have over 80 years of reserves in their kitty but also when compared with the global average of 50 years. As for natural gas, India’s reserve to production ratio stands at around 31 years versus about 150 years in West Asia and the global average of 60 years. India reported 1,330 billion cubic metres (bcm) of gas reserves at a production rate of 31 bcm per year. Part of the reason for the low reserves is that there are 26 sedimentary basins in India comprising roughly 3.14 million sq km, but only about 22% of the basinal area is well explored. Also, of the 1.35 million sq km of -water zones, where potentially a lot of reserves reside, only 50% of the area has been offered for exploration. Fereidun Fesharaki, chairman of FACTS Global Energy, said that India is simply not blessed with a lot of hydrocarbon reserves. Also, regulations and the bureaucracy in India are too prohibitive and this is reflected in the foreign participation in the NELP rounds, with only 12% of the total acreage and about 7% of total contracts awarded to foreign players till date, he said. The past track record of oil and gas discoveries in India has not been remarkable. The recoverable position of crude oil has slipped from 763 mt in in 2006-07 to about 761 mt now. In the first quarter of 2013-14, the KG-D6 field produced 0.5 million barrels of crude oil and 49.2 billion cubic feet of natural gas, an annual reduction of 41% and 53%, respectively. RIL’s other main producing field, Panna-Mukta, produced 1.8 million barrels of crude oil and 16.9 bcf of natural gas, a reduction of 19% in the case of crude oil and 5% in the case of natural gas. ONGC’s director of finance AK Banerjee said that India’s reserve to production ratio is not alarmingly low considering it is not richly bestowed with hydrocarbons. Moreover, some prominent oil and gas producing countries like the US and Russia have lower reserve to production numbers than India, he said. Sunjoy Joshi, director of the Observer Research Foundation, however, pointed that a low reserve to production ratio is possible in cases where the production is very efficient hence and reserves are extracted quickly as in the case of the US. But in the case of a net importer like India, the low reserve to production ratio is on account of lack of technical and manpower expertise. The DGH believes that the oil and gas reserves and production will get a further boost once the open acreage licensing policy (OALP) regime comes into force and India transitions away from NELP. The DGH has now called external agencies to collect data in order to move to the OALP regime which gives companies a round-the-year window to pitch for oil and gas in blocks of their choice. With these efforts DGH hope to unearth more hydrocarbon resources particularly in the deep-water zones. (www.financialexpress.com)
Moily asks energy PSUs to ready catch-up plans
July 22, 2013. More than half of 37 major public sector oil and gas projects worth over $6 billion, mostly being executed by India's biggest energy firm Oil & Natural Gas Corp and Gail India, have been suffering from inordinate delays, the oil ministry said. Oil minister Veerappa Moily has asked the ministry to identify about 10 high priority projects and monitor them "closely". GAIL said a steep fall in natural gas output from domestic fields, lack of gas users and fierce local resistance in acquisition of land were main constraints. The cabinet committee on investment (CCI), which is closely monitoring public sector companies' investments in projects, has created a specially cell to expedite regulatory approvals. (economictimes.indiatimes.com)
MEA discusses restoring supply of subsidised gas to Bhutan
July 21, 2013. Ministry of External Affairs (MEA) has initiated the process of assessing the financial and logistical implications to ensure a quick decision on restoring supply of subsidised gas to Bhutan. A meeting, chaired by foreign secretary Ranjan Mathai and attended by senior oil ministry and MEA officials, discussed various aspects to reinstate the subsidised gas and kerosene supply. The subsidy cut, just before the elections, had come against the backdrop of apparent unhappiness over the meeting between Bhutan PM Jigme Thinley and a top Chinese leader last year. He had a meeting with the then Chinese Premier Wen Jiabao in Rio and also imported some 20 buses from China, a development which had taken India by surprise. The meeting was aimed at exploring the option to quickly restore the supply even if it was on interim basis. However, an exhaustive reinstatement plan has to be cleared by the Union cabinet. Bhutan has made a formal request to External Affairs Minister Salman Khurshid not to implement the subsidy cut as it would have resulted in steep hike in diesel prices. The subsidy, amounting to ` 150 crore per annum, is borne by Indian Oil as part of its under-recoveries reported to the petroleum ministry. IOC cut the subsidy on kerosene and LPG on July 1, a fortnight before Bhutan went to polls, following an advice from the MEA to revise prices because it would not reimburse the subsidy component on the two fuels. The MEA said that since Bhutan's 10th Plan expired on June 30, fresh terms of financial assistance, including subsidies would have to be negotiated. (economictimes.indiatimes.com)
Karnataka going CNG way, to set up 25 stations
July 20, 2013. Karnataka is going the CNG way. Karnataka government and GAIL agreed to set up Compressed Natural Gas stations. The plan is to set up 25 CNG stations in bus depots here to start with, a number which would go up to 65 in phases. Chief Minister Siddaramaiah said 300 new buses the state would get under the Jawaharlal Nehru National Urban Renewal Mission would be run using CNG. Karnataka government and GAIL have already formed a 50:50 joint venture to undertake distribution of clean natural fuel for transport and other sectors in various cities of the state. Siddaramaiah and GAIL Chairman and Managing Director B C Tripathi said gas would be supplied from Dabhol-Bangalore gas pipeline to the proposed the 700 MW gas-based Bidadi power plant and to the 450 MW Yelahanka plant, currently shut because of pollution issues but would now be restarted to run by gas. Union Petroleum and Natural Gas Minister M Veerappa Moily said an additional pipeline would be laid -- a diversion of the Dabhol-Bangalore gas pipeline -- from Chitradurga to Udupi passing through Shimoga and Mangalore. Tripathi said this 350 km stretch would cost ` 1,400 crore. Moily also said there are plans to have another 140-km pipeline from Chitradurga to Bellary and Tripathi said this would cost ` 700 crore. GAIL would lay this pipeline once the industry comes forward with consumption requirements. The Minister noted that 80 per cent of the Dabhol-Bangalore gas pipeline passes through Karnataka, which now has an opportunity to create a "green corridor". Tripathi said the pipeline touches the highway every 100 kms and noted the possibility of having CNG stations there for the benefit of long-distance buses. On supply of gas to domestic users, Tripathi said a 50 km pipeline has been laid around Bangalore and the question now is to have connections inside the city which is expected within a year, while Moily, also a former Karnataka Chief Minister, said it could happen within six months. (economictimes.indiatimes.com)
RGIPT to set up ` 3.5 bn research centre in Bangalore
July 20, 2013. Rajiv Gandhi Institute of Petroleum Technology (RGIPT) would set up a ` 355 crore centre to work in the field of fire and safety technologies in the oil and gas sector. Karnataka government agreed to offer 200 acres of land to set up the centre which is expected to come up close to the airport. The Institute has the main centre in Rai Bareli, while there is one upstream one in Assam. The Noida centre offers MBA in petroleum and energy management, and the Bangalore centre would be its fourth. The Institute has been set up by an act of Parliament, and it's like Indian Institute of Technology. (economictimes.indiatimes.com)
India's natural gas production to jump 66 pc by 2016-17: Moily
July 20, 2013. India's natural gas output will jump by 67% in three years because of higher production from several blocks particularly Reliance Industries-operated KG-D6, where output will rise "substantially", oil minister Veerappa Moily said. Moily also said there was no dispute between Reliance and the Comptroller and Auditor General (CAG) of India and that Jubilant Energy had discovered an estimated 7 trillion cubic feet (tcf) of natural gas in Manipur, which is nearly twice the reserves of Reliance's producing gas field in KG-D6. Gas output will rise to as much as 129 million standard cubic metres per day (mmscmd) in 2014-15 and 139 mmscmd in 2015-16. Gujarat government-owned GSPC has projected a substantial increase in gas output from its block in the KG basin from 2014-15. India is facing acute shortage cheaper domestic gas because of a sharp fall in D6 output to 14 mmscmd now from 61.8 mmscmd about three years ago. Reliance is expediting production from new discoveries in the D6 block as the management committee of the block has approved $1.529 billion development plan for four satellite fields. (economictimes.indiatimes.com)
Domestic gas production unviable at prevailing rates: Moily
July 17, 2013. Stoutly defending the doubling of gas prices from 2014, Oil Minister M Veerappa Moily said the move will help bring to production over 3 Trillion cubic feet (Tcf) of gas reserves that had been declared economically unviable at current rates of $4.2. Several gas discoveries of firms like ONGC and RIL have been declared unviable by the Directorate General of Hydrocarbons (DGH) as current gas price of $4.2 was inadequate to cover the cost. Besides making deepsea gas finds viable, the new pricing regime which kicks in from April 1, 2014 would help revive the almost dead investment in the oil and gas hunt. With unremunerative price, gas production in India has declined from a peak of 143 million standard cubic metres per day in 2010-11 to 111 mmscmd in 2012-13. (economictimes.indiatimes.com)
POWER
Generation
JAKEDA to set up six Mini Hydel Power Projects
July 20, 2013. Jammu and Kashmir Energy Development Agency (JAKEDA) will set up six Mini Hydel Power Projects of 9.5 MW capacity through Independent Power Producers (IPP) mode under Phase-II in the state. JAKEDA has allotted six projects having 9.95 MW Cumulative capacities under Phase-I among IPP to develop these projects in different areas of the State. (economictimes.indiatimes.com)
KSEB steps up power generation
July 19, 2013. The Kerala State Electricity Board (KSEB) has generated an average of 20.5872 million units of power at its hydel stations daily during July so far. As copious rainfall continues in the catchments of the hydel reservoirs, the KSEB has stepped up generation of hydro power to avoid spill-over of the water flowing into the reservoirs. The KSEB has generated an average of 20.5872 million units of power at its hydel stations daily during July so far, against a low level of around 10 million units a day during mid-May when the water level in the reservoirs had touched rock bottom. The KSEB generated 21.8169 million units of hydro power. This accounted for 41 per cent of the total demand of 53.0297 million units of energy during the day. (www.thehindu.com)
Singapore-based Sembcorp eyes stake in NCC Power Projects
July 18, 2013. A Singapore-based company is in advanced talks to buy a power project in Andhra Pradesh, a rare instance of foreign interest in India's infrastructure sector which has been in the doldrums. A unit of Sembcorp, which is backed by Singapore's sovereign investor Temasek Holdings, is expected to buy a majority stake in NCC Power Projects for $250 million (` 1,500 crore). The deal is expected to be signed in about a month. NCC Power Projects, a joint venture between Hyderabad-based infrastructure firms NCC and Gayatri Projects, is developing a 1,320 MW coal-based thermal power project in Andhra's Nellore District. While the talks are for the 55% that NCC owns in the project-which is about half complete now and is expected to be ready by March 2015-there are indications that Gayatri Projects could sell part of the 45% stake it owns. India's infrastructure sector has been mostly shunned by foreign investors because of troubles related to clearances and problems with land acquisition. Power projects have also suffered because of difficulties in sewing up supply of fuel. (economictimes.indiatimes.com)
TAPS generated 22.4 pc of India's atomic power in Q1
July 17, 2013. The Tarapur Atomic Power Station (TAPS) in the district has recorded 22.42 per cent of the total 7,660 MUs atomic power generation in the country by all plants in the first quarter ended June, 2013. This was mentioned in the official report by the Nuclear Power Corporation of India (NPCI). The report said that in the period between April and June this year, the power generated by TAPS was 1,717 million units (MUs) and for the month of June alone it was 844 MUs. The cumulative power generated by TAPS till June 2013 since its inception is 1,29,903 MUs, it said. (economictimes.indiatimes.com)
Lalitpur power generation seeks coal linkage
July 17, 2013. Bajaj Hindusthan’s Lalitpur power generation company has requested coal linkage for its upcoming 1980 MW thermal power project at Lalitpur in Uttar Pradesh. In a letter to the Centre, the Company informed that long term PPA for the entire power has been tied up on cost plus basis with UP discoms and as per assessment of Central Electricity Authority (CEA),1320 MW of this project is expected to be commissioned by March 2015 and balance 660 MW by June 2015. In the letter, the Company officials highlighted that currently Cabinet Committee on Economic Affairs (CCEA) is examining the issue of price pooling of coal and supply of domestic coal for the projects aggregating to 82,660 MW. Out of this, there is a capacity of 4,660 MW which have not been issued Letter of Assurance (LoA) but which would be commissioned by March 2015 and have long term PPA tied up. Two units of Lalitpur TPP aggregating to 1320 MW are included in this 4,660 MW capacity. However, apprehensions have been raised in allocating coal to these projects as against the 30,000 MW capacity which have been issues LoA but have defaulted in meeting the timelines as per terms and conditions of the LoAs. The letter notes that at the Inter-Ministerial Committee meeting last month on issues related to the supply of coal, it was noted that most of this 30,000 MW capacity were not likely to be commissioned in the 12th Plan and some of these projects could even slip to the 14th Plan period. It was recommended that plants which are commissioned or are at advanced stage should have priority over these projects. (www.projectsmonitor.com)
Transmission / Distribution / Trade
Discoms to invest ` 20 bn to strengthen power distribution
July 20, 2013. Power distribution corporations in Haryana have planned to strengthen the distribution system in the state with an investment of ` 2,000 crore during the current financial year. Haryana Power Distribution Corporations will invest ` 2,000 crore this year to strengthen the distribution system, Uttar Haryana Bijli Vitran Nigam and Dakshin Haryana Bijli Vitran Nigam said. The top most priorities of the discoms are to plug revenue losses and bring consumer satisfaction for which a number of steps have been initiated during the last nine months. A complaint redressal system has been made functional at village level and the discoms have supplied electricity for more than the scheduled time to all consumers during the last three months. (economictimes.indiatimes.com)
Akhilesh Yadav, Jyotiraditya Scindia lay foundation of 800 KW power corridor
July 20, 2013. Uttar Pradesh Chief Minister Akhilesh Yadav and Union Minister Jyotiraditya Scindia laid the foundation of an 800 KW HVDC high-capacity power corridor between Chariali in Assam and Agra. Union Minister of state for Power Scindia also dedicated 765 KW single circuit transmission line between Agra and Meerut to the state people. The two projects of the Power Grid Corporation of India would improve the availability and transmission of power not only in Agra but also in the rest of Uttar Pradesh, he said. The 800 KW HVDC line from Assam would turn out to be the glory of the nation, Scindia said. The new projects being undertaken by the ministry would put an end to the power problems of the country by the year 2020. He said the 11th five-year plan target of 55,000 MW would be increased to 2.226 lakh MW in the 12th plan and the power grid transmission capacity would be increased from 31,850 MW to 65,550 MW. Yadav blamed the earlier BSP government for the power problems in Uttar Pradesh and expressed gratitude to the Union Government for the new projects inaugurated. The UP CM said power is the chief means of economic advancement and Centre should provide coal to the state at low costs for setting up of power plants. Yadav said if the Centre wanted to set up power plants in the state, his government would make land available for the purpose. Power Grid Corporation of India said the 800 KV HVDC project from Assam to Agra would be the world's highest multi-terminal project. A 6,000 MW terminal had also been set up in Agra. (economictimes.indiatimes.com)
NTPC power trading arm to supply 300 MW electricity to Kerala
July 19, 2013. NTPC Vidyut Vyapar Nigam Ltd will supply 300 MW electricity daily to Kerala for a period of three years starting from March, 2014. NVVN, a wholly-owned subsidiary of state-run power producer NTPC, would provide the electricity at a cost of around ` 4.50 per unit. NVVN and Kerala State Electricity Board (KSEB) entered into a power purchase agreement. (economictimes.indiatimes.com)
Privatise power distribution to tame losses: Montek
July 19, 2013. Pitching for privatisation in the power distribution sector, Planning Commission Deputy Chairman Montek Singh Ahluwalia suggested it can help in reducing huge losses and half of this business should be with private players. The power distribution sector is suffering due to huge losses of over ` 2.46 lakh crore in the country. Ahluwalia also suggested that the states should separate rural power feeders as it would have spill over benefits for them. About open access to power, he was of the view that there is no clarity on the issue as different people perceive it differently and thus, states should provide their view on it. In his piece of advice, he prescribed, privatisation in distribution sector either directly or through the franchisee route by the state. (economictimes.indiatimes.com)
BSES, Schneider join hand to offer energy saving solutions
July 18, 2013. Power distribution company BSES Rajdhani Power Ltd and Schneider Electric have entered into a partnership to offer energy saving solutions to electricity consumers. BSES Rajdhani Power Ltd said Delhi has a potential to save 760 MW of power daily and the joint venture between the two firms is aimed at offering BRPL consumers energy efficiency solutions. BRPL said by deploying these energy efficiency solutions, consumers can reduce their energy bills anywhere between 10 and 30 per cent without compromising on any of their energy needs. Initially, the BRPL-Schneider Electric partnership will target energy intensive consumers like industries, hotels, malls, hospitals and commercial buildings. As part of the consumer engagement exercise, Schneider, as a technical partner, will study the electricity load, load profile, power factor of a consumer and diagnose the efficiency of energy utilisation through various methods, including energy audits. The discom entered into the partnership with Schneider Electric as a part of its initiatives towards environmental sustainability, energy security and reduction in carbon emissions. Energy Management Services of Schneider Electric India Private Limited said the partnership will leverage the unique competencies of the organisations to provide cost-effective and energy-efficient solutions to power consumers. (economictimes.indiatimes.com)
NTPC-CIL fail to achieve target of 29 FSAs
July 17, 2013. NTPC and Coal India Ltd (CIL) could not meet the target of signing 29 Fuel Supply Agreements (FSA) as the two PSU majors could ink FSAs only for 28 units. The 29 thermal power units of NTPC have a combined output of 14,510 MW. The companies are yet to complete FSA for a 500 MW joint venture thermal power plant of NTPC and SAIL at Bhilai. The total coal quantity would be 60 million tonne per annum for the 28 FSAs signed so far out of 29 for NTPC's own plants and joint venture projects. There were 17 FSAs for NTPC-owned plants to source 40 million tonnes of coal and 11 FSAs for NTPC managed JVs, signed so far by both the PSUs. Both the PSUs tried to down play the differences between them that allegedly delayed the signing of FSAs by over a year. NTPC had refused to enter into FSAs with CIL over quality issues of the dry-fuel supplied to it and had stopped payment to Coal India subsidiary, Eastern Coalfields Ltd. Retorting to the step, the world's largest coal miner had temporarily stopped supply of fuel to NTPC which was resolved later following government's intervention. The FSA signing began with NTPC's 500 MW Kahelgaon unit in Bihar and 500 MW Farraka unit in West Bengal. (economictimes.indiatimes.com)
RBI to treat loans to ultra power projects as secured debt
July 22, 2013. The Reserve Bank of India (RBI) has allowed loans to new ultra mega power projects (UMPPs) to be regarded as secured debt even though the site and the plant will be owned by distribution utilities, not the winning bidder. Power Minister Jyotiraditya Scindia had approached RBI on the issue as lenders said debts to the proposed projects would be risky in the absence of ownership by the borrower. The new round of UMPPs, followings the previous projects such as the Mundra plant of the Tata group and Reliance Power's Sasan unit may also allow tariff revision, bar non-core sector firms from bidding and restrict offloading of equity by the company that is awarded the project. As per the proposed bidding norms, ultra mega power projects and such other location specific plants will be owned by power distribution utilities and the bidders will merely be contractors for constructing the project and operating them for 30 years. (economictimes.indiatimes.com)
Coal Ministry issues show cause notice to JSPL
July 22, 2013. The Coal Ministry slapped fresh show cause notices on Jindal Steel and Power Ltd (JSPL) and Gagan Sponge for delays in developing the blocks. The development comes on the heels of CBI lodging an FIR recently against JSPL and Gagan Sponge Iron Ltd, also a firm belonging to Congress MP Naveen Jindal, on bagging the Amarkonda Murgadangal coal block in Jharkhand by alleged misrepresentation of facts. As per the notice, both the firms have been issued show cause notices for failing to develop Amarkonda Murgadandal coal block, alloted in January 2008. In the notice, the Coal Ministry said that the companies had failed to meet the milestones set for development of mines and production from these blocks. (www.thehindu.com)
Tata Power eyes local acquisitions
July 21, 2013. Tata Power is eyeing local acquisition opportunities amid "stress" in the domestic sector. Besides, the company, which has an installed generation capacity of over 8,500 MW, is seeking to strengthen its footprint in the solar and wind power segments by way of new projects and acquisitions. Such acquisitions could help in leveraging its existing businesses in the power value chain. A raft of problems including acute fuel scarcity, precarious financial health of distribution companies (discoms) and hurdles in getting clearances continue to plague the Indian power sector. The company is engaged in executing power generation projects, across domestic and international geographies, having a cumulative capacity of 1,151 MW. These include 400 MW hydro plants in Georgia, 202 MW thermal project in Odisha and 234 wind plants in South Africa. (economictimes.indiatimes.com)
Govt issues another Presidential directive to CIL for FSAs
July 19, 2013. The government has issued another Presidential directive to Coal India to enter into fuel supply agreements (FSAs) with power plants for a capacity of 78,000 MW, the Coal Ministry said. Out of 78,000 MW, supply of coal to 60,000 MW capacity plant has already been agreed. The additional capacity of 7,000 MW would get assured supply of fuel and 11,000 MW would be cases of tapering (short-term) linkages. The development follows the Cabinet Committee on Economic Affairs (CCEA) in June asking Coal India to sign FSA for a total capacity of 78,000 MW, including cases of tapering linkage, which are likely to be commissioned by March 31, 2015. Actual coal supplies would however commence when long-term Power Purchase Agreements (PPAs) are tied up. The Coal Ministry had issued a Presidential directive for the first time to CIL to sign FSAs with the power producers assuring them of at least 80 per cent of the committed coal delivery. The CCEA had allowed power companies to pass on the cost of imported coal to consumers. (economictimes.indiatimes.com)
Private power plants in Punjab may start soon
July 18, 2013. The decision of the Central Electrical Authority (CEA) to allocate one lakh tonne of coal each for the trial run of the first units of the two upcoming power projects in Punjab, would help in strengthening the government's claim to make the State power surplus by next year. The first unit(660 MW) of Talwandi Sabo Thermal Plant would commence commercial operations by October this year, while Rajpura Thermal Plant's first unit(700 MW) would begin operations by January next year. With the assured supply of coal to the upcoming thermal plants, the state government was zeroing in to achieve its ultimate goal of generating additional power of 3920 MW. The Punjab government is of the view that with the commissioning of these power projects by private players, the State will become self sufficient in power. The power generation of the State was 7035 MW as on March 31, 2012 and unrestricted demand at the peak was about 9600 MW. Further, of the total, 4878 MW is from own power houses, 184 MW from micro hydel/bio-mass and other projects and 1993 MW is its share from central power project. Further, the Centre has issued a notification asking CIL to sign fuel supply agreements (FSA) to include the Unit-1 of Talwandi Sabo and Rajpura Thermal Plant for 2013-14. (www.business-standard.com)
UP promises land for second nuclear power plant in state
July 18, 2013. The Uttar Pradesh (UP) government has promised to make available land for development of second nuclear power plant in the state. The proposal was put forward by UP Chief Minister Akhilesh Yadav in a meeting with Planning Commission Deputy Chairman Montek Singh Ahluwalia to discuss the state plan size for 2013-14. The Planning Commission took the state's proposal in a positive manner for which a case has already been made to the Prime Minister. The proposed nuclear power plant, if agreed to, is expected to be set up on the banks of Ghagra river which flows in the eastern parts of Uttar Pradesh. India has six nuclear power plants and one of them is located in Narora, Uttar Pradesh. In the meeting, Yadav also said the state will hand over power distribution to private sector in Kanpur, Meerut, Varanasi and Ghaziabad by the end of this year. (articles.economictimes.indiatimes.com)
INTERNATIONAL
OIL & GAS
Upstream
Shell to ramp up Brazilian production
July 22, 2013. Royal Dutch Shell plc plans to boost deepwater production offshore Brazil with the Parque das Conchas and the Bijupira/Salema fields. Shell and its partners in the Parque das Conchas ultra-deepwater project in BC-10, Petroleo Brasiliero (Petrobras) and Oil and Natural Gas Corporation (ONGC), will move forward with the project’s third phase. Production from the project’s third phase is expected to peak at 28,000 barrels of oil equivalent per day (boepd). The BC-10 project has produced over 70 million barrels of oil equivalent since production began in 2009. The BC-10 project’s second phase is expected to come online with peak production of 35,000 boepd. Shell and Petrobras are also drilling four new production wells at the Bijupira/Salema fields, an effort expected to boost production to a 35,000 boepd peak in 2014. The fields have produced nearly 100 million barrels of oil equivalent since production began in 2003. (www.rigzone.com)
Chevron to develop shale oil, gas assets in Argentina
July 18, 2013. US-based Chevron’s subsidiary has signed an agreement with associates of Argentina-based oil company YPF to develop shale oil and gas resources on Vaca Muerta formation, located in the Neuquén province, Argentina. The company plans to spend about $1.24 bn in the first phase to develop the Loma La Lata Norte and Loma Campaña areas. The Loma La Lata field is currently producing about 10,000 barrels of oil-equivalent per day. As part of the programme, Chevron will first drill about 100 wells in a 5,000-acre tract, which is part of a 96,000-acre concession. Chevron said the agreement will allow the company to take part in the Vaca Muerta, which is one of the significant oil and gas play in the world. (refiningandpetrochemicals.energy-business-review.com)
Transportation / Trade
Qatargas sends first LNG to Malaysia
July 23, 2013. Qatargas Operating Company Limited (Qatargas) has sold Qatar's first cargo of Liquefied Natural Gas (LNG) to Malaysia. The cargo was sold to Petronas LNG Ltd (Petronas) of Malaysia and was loaded on the LNG Vessel Seri Begawan at Ras Laffan Port. The cargo will be delivered to Malaysia's first LNG receiving terminal located in Melaka. The cargo was supplied by Qatargas 2, a joint venture between Qatar Petroleum, ExxonMobil and Total. Qatargas and Petronas recently concluded a Master Sales and Purchase Agreement (MSPA) to facilitate the sale of this spot cargo and future volumes. Qatargas sees the South East Asian LNG market as an increasingly important growing regional market where it intends to strengthen its business activities. Till now, Qatargas has commissioned LNG terminals in Thailand and Singapore through delivering the first LNG cargoes to these markets. Qatargas has also delivered several LNG cargoes to PTT of Thailand and looks forward to the commencement of long-term supplies to Thailand in 2015. (www.downstreamtoday.com)
Iraq crude exports fall for second month on attacks, bad weather
July 22, 2013. Iraq’s crude exports and oil revenue declined in June for the second consecutive month because of foul weather at the country’s ports and attacks on northern pipelines, the oil ministry said. Shipments from OPEC’s second-largest producer after Saudi Arabia dropped to 69.8 million barrels. Exports in June generated $6.8 billion in revenue and equalled 2.33 million barrels a day. Iraq shipped 76.9 million barrels in May and 78.7 million in April, earning $7.48 billion and $7.76 billion, respectively, according to the oil ministry. Last month’s decrease in sales stemmed from sabotage of the pipeline network from Iraq’s northern oil hub of Kirkuk to the Turkish port of Ceyhan, together with high winds and dust storms that halted tanker loadings at southern terminals. The country’s self-governing Kurdish region has stopped exporting since December amid a dispute between Kurdish authorities and the central government. (www.bloomberg.com)
West Africa pirates seen threatening oil and shipping
July 22, 2013. West African pirates will threaten the region’s oil and shipping industries for years as the measures used to curb attacks in the Indian Ocean aren’t able to help, according to a provider of armed guards for vessels. While international navies and private security are repelling attacks off the Somali coast, guards can’t carry weapons into ports in West Africa. Attacks are more violent because the West African pirates have machine guns and focus on stealing cargoes instead of taking hostages. The escalating threat will probably last for years and may inhibit the region’s oil exports. West Africa shipped about 10 percent of the world’s crude last year, the most after the Middle East and the former Soviet Union. West African piracy overtook Somali attacks as the greatest threat to crews of merchant ships for the first time in 2012, according to organizations including the International Maritime Bureau (IMB). Incidents involving Somali pirates plunged to eight in the first half of 2013 from 69 a year earlier, according to the IMB, which monitors sea crime from London. (www.bloomberg.com)
Wall Street commodity trading in Jeopardy amid fed review
July 22, 2013. JPMorgan Chase & Co. (JPM), Morgan Stanley (MS) and Goldman Sachs Group Inc. (GS) are among lenders whose commodity-trading is in jeopardy as the Federal Reserve reconsiders letting banks ship oil and store metal. The central bank, ahead of a Senate subcommittee hearing on the issue, says it’s reviewing a decade-old ruling to let deposit-taking banks trade physical commodities. A reversal would be the Fed’s biggest exclusion of banks from a market since Congress lifted the Depression-era law against them joining with securities firms in 1999. The 10 largest Wall Street banks generated about $6 billion in revenue from commodities in 2012, including dealings in physical materials as well as related financial products. Goldman Sachs ranked No. 1, followed by New York-based JPMorgan. (www.bloomberg.com)
TransCanada says Keystone XL start in 2015 ‘difficult’
July 20, 2013. TransCanada Corp. said the timeline for U.S. approval of the $5.3 billion Keystone XL pipeline project will make the start of operations in the second half of 2015 “difficult.” If approved, Calgary-based TransCanada needs 24 months to build the pipeline, which would connect oil production from Alberta to refineries on the U.S. Gulf Coast. President Barack Obama initially rejected the project in January 2012. The company reapplied with a new Nebraska route last year and split the project in two, building the southern portion that doesn’t require a permit first. Environmentalists oppose the project because of the potential for oil spills along its more than 2,000-mile route. Some opponents are also blocking it because it will transport crude from Alberta’s oil-sands projects, which generate more greenhouse gases than most conventional production. (www.bloomberg.com)
WTI crude exceeds Brent for first time in almost three years
July 20, 2013. West Texas Intermediate (WTI) crude became more expensive than Brent for the first time in almost three years as pipeline and rail shipments helped clear a bottleneck that reduced the price of the U.S. benchmark. Improved pipeline networks and the use of rail links are helping to ease the North American oil glut created by rising production of crude from shale formations. WTI has jumped 18 percent this year, while Brent has decreased 2.5 percent as North Sea supplies stabilized after maintenance. WTI for September delivery rose to as much as 3 cents above Brent futures for the same month in intraday trading. WTI settled at a 20-cent discount to the U.S. benchmark. (www.bloomberg.com)
Temasek racing Exxon to build biggest LNG terminal stash
July 18, 2013. A Temasek Holdings Pte unit is up against Exxon Mobil Corp. and Royal Dutch Shell Plc in a contest to fill storage tanks that will hold three times as much liquefied natural gas as Singapore will consume this year. The city-state’s Energy Market Authority is seeking feedback through the end of July for stocking an LNG terminal with capacity of as much as 9 million metric tons. The threefold expansion will allow Singapore to offer last-minute deliveries, or spot cargoes, to buyers in Asia seeking an alternative to long-term contracts linked to oil. Singapore, Asia’s oil-trading center, is challenging Shanghai and Bangkok to play matchmaker for buyers and sellers of LNG, supercooled gas shipped by tankers rather than pipelines. Shell, Exxon and Pavilion Energy, set up in April by Singapore’s investment company, Temasek, are among the contenders as the city selects additional suppliers for the LNG terminal now stocked exclusively by Berkshire, England-based BG Group Plc. (www.bloomberg.com)
California seeks record fine in pipeline explosion
July 17, 2013. California regulators called on Pacific Gas & Electric Co. (PG&E) to pay at least $300 million in fines in connection with a deadly 2010 gas pipeline blast in what they said would amount to the largest fine ever levied by the state Public Utilities Commission. In an amended brief filed in the pipeline case, the commission's safety division cited the eight people killed and 38 homes destroyed in the blast in the San Francisco Bay Area suburb of San Bruno and said there were steps PG&E could have taken to prevent the underground explosion. Regulators had originally called for a $2.25 billion penalty against PG&E, though it would consist entirely of funds the utility has spent or promised to spend on pipeline system improvements ordered by the commission. (www.downstreamtoday.com)
PetroSA said to consider buying Petronas’ stake in Engen
July 17, 2013. PetroSA, South Africa’s oil company, is considering buying the controlling stake in Engen, the country’s biggest fuel retailer, now held by Malaysia’s government. Petroliam Nasional Bhd., Malaysia’s state oil company known as Petronas, holds 80 percent of Engen with Pembani Group Ltd., a private equity firm based in Johannesburg, owning the rest. South Africa’s oil industry had sales of 267 billion rand ($27 billion) in 2011, according to the South African Petroleum Industry Association. (www.bloomberg.com)
Policy / Performance
OPEC oil revenue to decline from 2012’s record high: EIA
July 23, 2013. OPEC, excluding Iran, made $982 billion from exporting oil in 2012, the most in 38 years of data, the U.S. Energy Information Administration (EIA) reported. It forecast that sales will drop in 2013 and 2014. Net oil-export revenue by the 12-member organization climbed 5.4 percent last year from 2011, according to the EIA. Sales will tumble by 4.3 percent to $940 billion this year and by 3.9 percent to $903 billion next year, the agency said. Demand for OPEC’s crude will slip by 300,000 barrels a day next year to 29.6 million barrels, or 2.6 percent less than the group is pumping now, OPEC said. Exports to North America face growing competition from a surge in production from shale basins in the U.S. and Canada. U.S. crude output reached 7.35 million barrels a day at the end of April, up 17 percent from a year earlier. Saudi Arabia, OPEC’s largest producer, earned 32 percent of the 2012 total, or $311 billion, the EIA said. The agency excluded Iran, OPEC’s second-biggest producer a year ago which is now in sixth place as sanctions aimed at stopping the Islamic republic’s nuclear program have hindered its ability to export crude. A European Union ban on the purchase, transport, financing and insurance of Iranian oil went into effect July 1, 2012. (www.bloomberg.com)
Nigerian lawmakers want Shell, Eni oil award revoked
July 19, 2013. Nigeria should revoke oil rights for which Royal Dutch Shell Plc and Eni SpA paid $1.1 billion, a parliamentary committee said, alleging that the acquisition process was “highly flawed.” Shell and Eni jointly bought Oil Prospecting License 245 from Malabu Oil & Gas Ltd., controlled by Dan Etete, a former oil minister, in 2011. Located in the deep offshore waters of the Gulf of Guinea, it is estimated to hold at least 9 billion barrels of crude reserves worth $1 trillion. Nigeria is Africa’s largest oil producer, with Shell, Exxon Mobil Corp., Chevron Corp., Total SA and Eni running joint ventures with Nigerian National Petroleum Corp. that pump more than 90 percent of the country’s oil. The West African nation produced 1.83 million barrels a day of oil in June. (www.bloomberg.com)
Pakistan's ECC Okays LNG Terminals at Karachi Seaport
July 19, 2013. The Economic Coordination Committee of the Cabinet (ECC) has decided to approve three different projects for the construction of terminals at Port Qasim for receiving, storing and re-gasifying the liquefied natural gas (LNG) as Qatar has agreed to supply 500 million cubic feet per day (mmcfd) LNG to Pakistan. Finance Minister Ishaq Dar chaired the ECC meeting which approved the projects for the construction of terminals at Port Qasim. The Fast Track Engro Terminal Project is likely to be completed between 6 to 8 months with an estimated cost of $30-40 mn and having a capacity of accommodating 200 mmcfd. Modalities will be finalised between the finance and petroleum secretaries. (www.downstreamtoday.com)
Currency to oil rates targeted for tougher rules after Libor
July 17, 2013. Benchmarks underpinning markets from oil to currencies face tougher oversight under plans by global regulators to prevent any repeat of Libor-style fraud. Rates should be based as much as possible on real transaction data, rather than estimates, and banks should tackle conflicts of interest, the International Organization of Securities Commissions, a Madrid-based group that harmonizes global market rules, said. Authorities are grappling with a growing number of rate-setting scandals. Global regulators have fined UBS AG, Barclays Plc and Royal Bank of Scotland Group Plc about $2.5 billion for distorting the London interbank offered rate, known as Libor, and similar benchmarks. The U.S. Federal Energy Regulatory Commission ordered Barclays and four former traders to pay a combined $487.9 million in fines, as part of an investigation of alleged manipulation of energy markets. (www.bloomberg.com)
POWER
Japanese coal power plant project stalled in Indonesia
July 19, 2013. A $4 billion Japanese project to build a large coal power plant in Indonesia has hit a snag due to opposition from local residents. About 50 landowners have refused to sell land totaling around 40 hectares that would account for about 20 percent of the site for the 2 million-kilowatt plant to supply electricity to 13 million people in Central Java State. Unless purchase of the land is completed by Oct. 6, PT Bhimasena Power Indonesia, an Indonesian company established for the project with Japanese investment, will lose its right to construct the power plant and a new round of bidding will be conducted. The Japanese government plans to urge the Yudhoyono administration to issue a presidential decree to delay the deadline again. The Indonesian government has also supported the project as electricity demand has been growing fast amid rapid economic growth. (www.globalpost.com)
Azerbaijan TPP ups power generation
July 19, 2013. The Azerbaijani Thermo-Electric Power Plant generated 1.6 billion kilowatts of electricity per hour in the first half of the year, compared to 1.5 billion kilowatt per hour in January-June 2012. 437.1 million kilowatt of electricity per hour was generated by the power station in June, compared to 521.7 kilowatt per hour in June 2012. The share of Azerbaijani Thermoelectric Power Plant in the total electricity generation of Azerbaijan is 40 percent. (www.azernews.az)
Uzbekistan slightly increases electricity generation since early 2013
July 18, 2013. Uzbekistan increased electricity generation by 3.8 percent to 27.057 billion kilowatt per hour in January-June 2013 compared to the first six months of 2011. Uzbekistan's power stations have provided the population and the enterprises of the republic with 9.613 million gigacalories of thermal energy since early 2013 (a 3.4 percent decrease). The electricity generation increased by 0.2 percent to 52.534 billion kilowatt per hour in 2012 compared to 2011. The Uzbek power stations provided the population and enterprises with 18.876 million gigacalories of thermal energy (a 0.2 percent decrease). (en.trend.az)
China's second largest hydel station goes on stream
July 17, 2013. China’s second—largest hydropower station turned operational with its first power generating unit officially starting work after completing a three—day test run. The unit of Xiluodu hydropower station is located on the lower reach of Jinsha river between southwest China’s Leibo county in Sichuan Province and Yongshan county in Yunnan province. The first generator unit “13F” went into formal operation after a three—day trial. The hydropower plant will be the second largest one ranking only second to the Three Gorges when all of its 18 units go into operation in 2014. The No. 13 power generating unit, having a capacity of 770,000 kw at the Xiluodu hydropower station, started providing electricity to the China Southern Power Grid, its operator China Three Gorges Corporation said. With a total generating capacity of 13.86 GW, the station is the world’s third—largest after the Three Gorges and Itaipu hydroelectric projects. Construction of the Xiluodu hydropower station, located in the Jinsha river, a major headstream of the Yangtze in south-western Yunnan and Sichuan provinces, started in 2005. It is expected to be completed in 2015 with 18 power generating units. (www.thehindu.com)
Transmission / Distribution / Trade
ABB wins contract to build new transmission substations in Iraq
July 19, 2013. Swiss automation and power firm ABB has secured a $30 mn contract from Zagros Energy to build four new transmission and distribution substations in the Kurdistan region of Iraq. As per the deal, ABB will design and supply the substations, which will be based on GIS technology. Two will be connected with 132kV underground cables due to the lack of space for overhead lines. ABB will also supply circuit breakers, air-insulated switchgear, control and protection systems, capacitor banks, power transformers and other high-voltage equipment. The project is expected to be completed in 2014. The substations will help the region meet its increasing demand for electricity. The Kurdistan power grid currently supplies about 2,750 MW of electricity with over 90% of the capacity owned and operated by independent power firms. ABB said the increasing demand for electricity means that outages and blackouts are frequent and in the short term, a capacity expansion to about 4,000 MW is planned, while in longer term it is expected to reach 10,000 MW. (utilitiesnetwork.energy-business-review.com)
GSE to build 500kV transmission line to Russia
July 17, 2013. Georgia-based state owned transmission providing company, Georgian State Electrosystem (GSE), has announced to build a new 500kV transmission line towards Russia. GSE said the project would be implemented for a cost of $50 mn. At present, the two countries Georgia and Russia are exchanging power through 500kV Kavkasioni power transmission line. Through the line Georgia receives electricity during winter. (utilitiesnetwork.energy-business-review.com)
Pakistan to privatize energy sector, China will invest $6 bn
July 22, 2013. The Pakistani government has decided to privatize companies engaged in power generation and power delivery, including publicly owned power plants as part of the country's new energy policy. A final draft of Pakistan's new energy policy will be released by August 2013, according to the country's minister of water and power. In June, Nawaz Sharif, the prime minister of Pakistan, released a new energy policy that promises new investments in the power generation sector to address power outages. In the new policy, the Islamic republic set a goal to increase its power generation capacity to a total of 26,800 MW over the next 3 years. The country currently can generate about 21,100 MW, mostly from fossil fuels and hydropower. CWE Investment Corp. of China will invest $6 billion over the next 5 years in Pakistan's energy sector. The investment will take the form of several power generation projects, including the 1,100 MW Kohala Hydropower Project, the 720 MW Karot Hydropower Project, the 50 MW Punjab solar energy project and the Three Gorges Wind Farm, which has the option of being expanded to 350 MW. (www.elp.com)
Nuclear closures at Entergy to Exelon seen on Obama plan
July 22, 2013. Nuclear reactors that light New York City and Chicago with carbon-free electricity face possible extinction before they can reap the benefits of President Barack Obama’s proposed climate rules. Entergy Corp.’s Indian Point power plant in New York and Exelon Corp.’s Clinton facility in Illinois are among nuclear generators that may be shut down from either political or financial pressure on an industry that generates as much as $50 billion in U.S. electricity sales each year. Obama’s stricter emission plan that would penalize dirty operators and make cleaner generation like nuclear more competitive probably won’t kick in until after the end of this decade. That leaves operators of reactors at least six years to survive the lower prices and higher costs of the current market. A slump in power prices, increasing maintenance expense as plants age and stricter safety regulations following Japan’s 2011 Fukushima nuclear disaster may prompt the industry to retire as many as five plants before the end of the decade. That would eliminate enough generating capacity to power 2.4 million U.S. homes. In New York, Governor Andrew Cuomo has called for the shuttering of Entergy’s two Indian Point reactors after their licenses expire this year and in 2015. The plant sits about 24 miles north of New York City and provides about one-fourth of the metropolitan area’s electricity needs. The state is developing plans to replace the 2,069 MW facility with new gas generators and transmission lines. Entergy’s application with the U.S. Nuclear Regulatory Commission to extend Indian Point’s operating license for another 20 years is being contested by anti-nuclear and environmental groups. The company also is in negotiations with New York regulators over whether it needs to install environmental upgrades that may cost more than $1 billion. (www.bloomberg.com)
Egypt calls on Ethiopia to seek solution on Nile water sharing
July 20, 2013. Egypt will try to reach a solution for its conflict with Ethiopia about a dam on the Nile river, Egyptian Foreign Minister Nabil Fahmy said. Ethiopia this year decided to proceed with the construction of the Grand Ethiopian Renaissance Dam, planned as Africa’s largest hydropower plant, ignoring Egypt’s concern that its water supply would be reduced. Mohammed Mursi, the Egyptian president who was ousted in an army coup this month, had been accused by his opponents of having no plan for dealing with the Ethiopian dam project. (www.bloomberg.com)
USDA awards funds to upgrade rural electric infrastructure
July 18, 2013. The US Department of Agriculture (USDA) has announced $188 mn in loan guarantees to upgrade rural electric infrastructure, including over $18mn in smart grid funding. The funding will be used to finance the construction of over 1,000 miles of new or improved electric line. Rural utilities which received loans under the USDA funding round include Seminole Electric Cooperative, Rayle Electric Membership, Goodhue County Cooperative Electric Association, Central Electric Power Cooperative, Central Rural Electric Cooperative, Black Hills Electric Cooperative and Lacreek Electric Association. (utilitiesnetwork.energy-business-review.com)
Power plants face ‘collision course’ with water, researchers say
July 17, 2013. U.S. power producers must reduce their dependence on water or they may be forced to lower output as drought and other extreme weather events curtail their access to water supplies, researchers said. Power plants throughout the U.S. “repeatedly” had to reduce output or even shut down completely last year for want of cooling water, and the conflict between the growing need for electricity and the increasing demands on the water supply is only becoming more pronounced, according to a report from the Union of Concerned Scientists. About 40 percent of the U.S. supply of fresh water goes to power plants that convert steam into power, the Cambridge, Massachusetts-based group said. That comprises all coal and nuclear facilities and some fueled by natural gas and renewable sources. As the utility industry seeks to reduce carbon emissions by replacing aging generating stations, it should also consider water consumption. Two technologies aimed at reducing carbon emissions, nuclear power and carbon capture and storage for coal plants, require substantial water resources. Existing facilities also may adjust the ways they use water. The Palo Verde nuclear plant outside Phoenix now uses wastewater for cooling, saving 11 billion gallons (42 billion liters) of fresh water annually. (www.bloomberg.com)
UK towns near EDF nuclear plant offered $195 mn
July 17, 2013. U.K. communities near Electricite de France SA (EDF)’s planned new nuclear power station in southwest England will get as much as 128 million pounds ($195 million) for hosting the project under government plans announced. Residents near eight planned projects in England and Wales will get benefits worth as much as 1,000 pounds per megawatt of capacity per year for four decades, the Department of Energy and Climate Change said. EDF’s plan to build two Areva SA reactors totaling 3,260 MW at Hinkley Point in Somerset is the most advanced of the projects. The plan is at least the third set of incentives announced this year by the U.K. to persuade communities to host energy projects, from shale gas rigs to wind farms. The government is trying to spur the 110 billion pounds of investment it says is needed in new power plants and grid upgrades in order to keep the lights on and meet carbon emissions targets. EDF, Hitachi Ltd., Iberdrola SA and GDF Suez SA plan a combined 16 GW of new nuclear power stations in the U.K. (origin-www.bloomberg.com)
RENEWABLE ENERGY / CLIMATE CHANGE TRENDS
National
Delhi can make hay in power sector while the sun shines
July 23, 2013. The national capital can generate over 2,500 MW of electricity using just 4.42 per cent of the total rooftop space available in the city. As per the report 'Rooftop Revolution: Unleashing Delhi's solar potential' published by NGO Greenpeace, Delhi's rising power demand could be met by exploiting the solar power potential. Currently, the city's gas and coal-based power plants have a total power production capacity of 1,345 MW against its daily demand ranging from 4,800 MW to 5,500 MW. The report said prices per unit of electricity generated through solar power has come down by almost 50 per cent due to introduction of modern technologies and initiatives taken by the players in the field to make it more affordable. Delhi's electricity grid infrastructure often collapses under the strain of excess loads. A project of 2 GW of rooftop solar photo voltaic systems will help stabilize the grid, it said. The report claimed 62,000 new full-time jobs can be created through the installation solar panels having a capacity to generate 2 GW of electricity. The largest potential for solar power rests with residential buildings at 1.2 GW or 49 per cent of the total solar potential, followed by industrial buildings at 15 per cent, government buildings and public facilities at 13 per cent. The report not only maps the potential and viability of the various building types falling under different tariff categories but also details business models and scenarios under which solar rooftop is advantageous. (economictimes.indiatimes.com)
Tata Power to set up 28.8 MW solar plant in Maharashtra
July 22, 2013. Tata Power, through its wholly owned subsidiary, Tata Power Renewable Energy Limited (TPREL) would develop one of its largest photovoltaic based solar power plants with an installed capacity of 28.8 MW in the Satara district in Maharashtra. Tata Power (Distribution), the distribution arm of Tata Power, has signed a power purchase agreement (PPA) for a term of twenty-five years in order to purchase power from this solar plant, thereby meeting its solar renewable purchase obligations (RPO). The power generated will be evacuated through Maharashtra State Electricity Transmission Limited (MSETCL)'s network. The company intends to commission the entire project capacity by December 2013. Tata Power group currently has a portfolio of 30+ MW of solar power. It commissioned 25 MW solar photovoltaic (PV) power project at Mithapur, Gujarat and 3 MW at Mulshi, Maharashtra. Its subsidiary Tata Power Delhi Distribution Ltd has also commissioned a 1 MW grid-connected roof top solar plant in Delhi. A 60.48 KWP solar power plant has been functional on top of one of the building at its office in Carnac Bunder, Mumbai. The company proposes to add 50 MW of solar power capacity every year. (economictimes.indiatimes.com)
India may expand solar anti-dumping probe to EU, Japan
July 19, 2013. Indian clean-energy companies that claim the U.S. and China dumped cheap solar cells on the market are seeking to extend their case to include imports from Europe and Japan. Indosolar Ltd, Jupiter Solar Power Ltd and Websol Energy System Ltd told a New Delhi hearing that they filed a petition to expand the investigation, the Solar Independent Power Producers Association (SIPPA) said. India joins a trade dispute among the world’s biggest economies as they fight to protect their solar companies amid a global glut of supplies. Members of SIPPA, numbering at least 10 project developers, would see their cost of materials increase should the allegations be upheld. They argue that Indian manufacturers don’t meet quality and capacity demands. The initial case relates to imports from the U.S., China, Taiwan and Malaysia. The hearing drew officials from those countries representing solar-cell and solar-panel makers such as First Solar Inc. and JA Solar Holdings Co. as well as dozens of representatives from the local industry. Indosolar, Jupiter and Websol allege that foreign competitors sold solar products below the market price in India. They calculate the damage inflicted on their industry at as much as twice the cost of imports from January 2011 to June 2012. They’re asking the government for duties, both retroactive and current, as well as tariffs on thin-film solar modules. All parties must submit written statements by July 25 and defendants have until Aug. 2 to respond. The government is due to decide whether to impose tariffs or drop the case by the end of August. Under World Trade Organization rules, petitioners must have at least a 25 percent share of the market to open a case. In India, estimates of market size aren’t reliable and it’s unclear whether the three petitioners meet these criteria. China set tariffs of as much as 57 percent on polysilicon shipped from the U.S. and South Korea. The U.S. itself imposed tariffs of as much as 250 percent on Chinese solar panels last year after a drop in prices led to bankruptcies. The European Union set preliminary duties of 11.8 percent on Chinese modules, which may jump to 67.9 percent if a deal isn’t reached. (www.bloomberg.com)
Astonfield to set up 250 MW solar plants
July 18, 2013. Astonfield Renewable Resources Ltd is looking at developing 250 MW over the next two years at an investment of at least ` 2000 crore. At present the company has under development projects in India, Africa and the Middle East. It aims to install a further 50-75 MW in 2013 and diversify its activities to three to four more Indian states by the end of its current fiscal year in March 2014. Astonfield's 2 MW plant in Jhansi District, Uttar Pradesh, sits on 18 acres. While this plant powers over 5,200 Indian homes approximately, its notable that it was completed in just 77 days. Astonfield has projects under development not only in India, but also Africa and the Middle East. It aims to install a further 50-75 MW in 2013 and diversify its activities to three to four more Indian states by the end of its current fiscal year in March 2014. Its goal is to develop about 250 MW of new solar capacity in India over the next two years. (economictimes.indiatimes.com)
Global
Foster’s solar-skinned buildings signal market tripling
July 23, 2013. From stadiums in Brazil to a bank headquarters in Britain, architects led by Norman Foster are integrating solar cells into the skin of buildings, helping the market for the technology triple within two years. Sun-powered systems will top the stadia hosting 2014 FIFA World Cup football in Brazil. In Manchester, northern England, the Co-operative Group Ltd. office has cells from Solar Century Holdings Ltd. clad into its vertical surfaces. The projects mark an effort by designers to adopt building-integrated photovoltaics, or BIPV, where the power-generating features are planned from the start instead of tacked on as an afterthought. Foster and his customers are seeking to produce eye-catching works while meeting a European Union directive that new buildings should produce next to zero emissions after 2020. The market for solar laid onto buildings and into building materials is expected to grow to $7.5 billion by 2015 from about $2.1 billion. Sales of solar glass are expected to reach as much as $4.2 billion by 2015, with walls integrating solar cells at $830 million. About $1.5 billion is expected to be generated from solar tiles and shingles. (www.bloomberg.com)
Brazil lowers wind-energy prices by 20 pc in August auction
July 23, 2013. The Brazilian government lowered the maximum price developers may sell energy by 20 percent in next month’s auction for new wind farms. Developers that win contracts in the so-called reserve energy auction won’t be allowed to charge more than 117 reais ($52.70) a megawatt-hour. A similar event in 2011, which included biomass plants, had a top price of 146 reais. Developers expected a maximum price of at least 125 reais after the government required turbine makers to source more of their parts locally. Domestic content rules are boosting project costs and making power more expensive. In Brazil’s power auctions, the government sets a ceiling rate and developers submit bids for the prices at which they are willing to provide power. The lowest offers win contracts to sell electricity. (www.bloomberg.com)
Bedouin tribe talks a risk in Saudi solar drive, Eversheds says
July 22, 2013. Companies vying to supply Saudi Arabia and other Middle East nations with solar, wind and nuclear power face potential hurdles including negotiating access to Bedouin tribe lands, law firm Eversheds LLP said. Saudi Arabia, the biggest oil exporter, is seeking about $109 billion of investment for a solar industry that will generate a third of its electricity by 2032, or about 41GW, according to the International Renewable Energy Agency in Abu Dhabi. That’s more than the 32 GW of renewable energy generation the European Union installed last year. Outside developers in Saudi Arabia, which is using its oil wealth to invest in renewables, may struggle to determine land ownership and win local zoning approvals for projects, according to Eversheds. Contractors may need to get access from traditional owners, who may include Bedouin tribes. Infrastructure banks and Japanese trading houses are among groups seeking to supply renewable energy in the Middle East as investments in Europe are scaled back. Its solar program is part of a wider program to generate 54 GW from renewable energy sources. (www.bloomberg.com)
Republicans propose limiting Obama climate plan in budget
July 22, 2013. House Republicans proposed cutting the Environmental Protection Agency (EPA)’s budget by a third and denying funds for a key part of President Barack Obama’s plan to combat global warming. The House Appropriations committee’s panel that oversees the EPA will consider cutting $2.8 billion from the agency’s 2014 budget, and prohibit the administration from spending on greenhouse-gas rules for power plants, the centerpiece of Obama’s climate plan. The budget for the year starting Oct. 1, which will get a vote in the subcommittee, also would bar the EPA from imposing new curbs on sulfur in gasoline and on the use of water by power plants. House Republicans are seeking to limit the president’s efforts to reduce emissions of greenhouse gases, which scientists say are causing global warming. While the measures with the restrictions have little chance of being adopted in the Democratic-led Senate, they underscore efforts administration critics are considering to head off or slow the EPA’s regulation. (www.bloomberg.com)
Lithium power seen trumping risk in aircraft battery use
July 22, 2013. If the lithium battery-fed fire that scorched a parked and empty Boeing Co. Dreamliner jet in London had occurred over the ocean, hours from an airport, the result could have been catastrophic. The July 12 blaze on the Ethiopian Airlines Enterprise 787 was in a difficult-to-reach space and couldn’t be put out by the plane’s fire extinguishers, according to U.K. regulators. Only one-third of airliners with such hidden fires can be expected to land safely, an earlier U.K. study concluded. Lighter, more powerful and longer-lived than other batteries, lithium cells power devices from Apple Inc.’s iPhone to the 787 and some of its components, including the Honeywell International Inc. emergency locator transmitter linked to the London fire. (www.bloomberg.com)
Origin says Australia carbon policy changes may delay investment
July 21, 2013. Origin Energy Ltd., Australia’s largest electricity and gas retailer, said shifting government policies to reduce carbon emissions will discourage investment in power plants. Australia’s Prime Minister Kevin Rudd plans to move to emissions trading a year ahead of schedule and scrap predecessor Julia Gillard’s policy should his Labor government win this year’s election. The carbon price began at A$23 ($21.10) a metric ton last year, rose this month to A$24.15 and was scheduled to climb to A$25.40 in 2014. It will transition next year to a floating price of about A$6, Rudd said. Opposition leader Tony Abbott has pledged to ditch the carbon price system if he wins the election. The fixed price on emissions for about 300 of Australia’s largest polluters was planned by Gillard to reduce the country’s reliance on coal and help meet the target for a 5 percent cut in greenhouse gas emissions from 2000 levels by 2020. Abbott’s Liberal-National coalition also supports Australia’s 5 percent reduction target by 2020. (www.bloomberg.com)
Carbon-cost change seen by republicans as raising prices
July 19, 2013. Republican lawmakers criticized the administration of President Barack Obama for raising its estimated cost of climate change, a step they said will increase prices for fuel, electricity and appliances. The adjustment to the so-called social cost of carbon was slipped into a regulation on the efficiency of microwave ovens. The cost estimate of $38 a metric ton in 2015, raised from $23.80, reset the calculation the government uses to weigh costs and benefits of proposed regulations. The figure is meant to approximate losses from global warming such as flood damage and diminished crops. It rose because of changes in the outside models used by the government to estimate these costs. (www.bloomberg.com)
Softbank, Bloom Energy Team up in Japanese fuel cell venture
July 18, 2013. Softbank Corp., the Japanese majority owner of Sprint Corp., formed a joint venture with Bloom Energy Corp. to market and distribute the California startup’s fuel cell technology in Japan. Softbank, Japan’s third-biggest mobile phone company, and Sunnyvale-based Bloom will each contribute $10 million to the Bloom Energy Japan Ltd. venture, in which they will share equal ownership. Bloom’s units generate electricity from gas without burning the fuel, a more efficient process that produces fewer carbon emissions. Using fuel cell units also reduces the risk of blackouts, such as those that occurred in Japan after the March 2011 Fukushima accident, since they’re not dependent on centralized power plants. The venture plans to sell energy under contracts lasting at least 20 years, during which rates paid by customers will not change. Under the agreements, Bloom will set up units at customers’ locations and keep them fueled.
Softbank plans to install a 200-kilowatt fuel cell unit at one of its buildings in Fukuoka on the southwestern island of Kyushu. The unit may start generating power this year. Bloom’s customers in the U.S. include Wal-Mart Stores Inc., AT&T Inc., Google Inc. and Coca-Cola Co. Softbank’s renewable energy projects include stakes in a proposed 48 MW wind farm and a planned 39.5 MW solar plant at sites in western Japan. The company completed its takeover of Sprint this month. (www.bloomberg.com)
Australia emissions link may spur EU carbon bank
July 17, 2013. Linking with Australia’s carbon market may spur the European Union to set up an independent panel to help manage demand and supply in its own program, improving governance. The structure would need to be independent of nations while including input from governments and national or European agencies. The Australian Climate Change Authority provides independent advice on the operation of that nation’s carbon price and its emission caps. Discussions to link the European and Australian carbon markets were speeding up. The regulator was exploring whether the two markets may be able to form an interim link in July 2014, a year earlier than previously planned.
The U.K. has the Committee on Climate Change that advises on carbon budgets in that nation. In the EU, the Brussels-based commission proposes carbon-market laws, helps oversee them and publishes emissions data. It also leads the bloc in international climate negotiations. The EU should consider a central carbon bank, whose role would be to help manage imbalances between supply and demand in the system.
EU emission allowances for December declined 2 cents to 4.12 euros ($5.41) a metric ton on the ICE Futures Europe exchange in London. The contract was at a record 34.91 euros a ton in June 2008. Carbon prices need to rise beyond 20 euros a ton to help shift power output away from coal and toward natural gas and non-fossil fuels. The central carbon bank could help manage the transition and balance the need to keep emissions falling on the one hand and costs down on the other. (www.bloomberg.com)
Spain clean energy subsidy cuts raise bankruptcy risk
July 17, 2013. Spain’s cuts to renewable energy subsidies will leave many project developers facing bankruptcy. The decision announced calls for half of the savings to come from renewable energy generators and cap the rate of return for the industry at 7.5 percent before tax. That adds to previous reductions that have slashed state aid to renewables by as much as 40 percent.
Prime Minister Mariano Rajoy’s government is seeking to eliminate a 4.5 billion-euro deficit forecast this year for the power industry. Renewables had already been hit by a 7 percent tax on their revenues introduced in December and a suspension of subsidies to new projects in January 2012. That followed measures in 2011 that limited the hours for which solar farms could earn subsidies. (www.bloomberg.com)
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
