MonitorsPublished on Jun 24, 2022
Energy News Monitor | Volume XVIII, Issue 50
Quick Notes

Growth of Hydropower in India: Role of the Private Sector


The executive director of the IEA (International Energy Agency) remarked in 2021 that hydropower was the forgotten giant of clean electricity and that it needs to be put squarely back on the energy and climate agenda if countries are serious about meeting their net-zero goals. This is an important message for India where the share of hydropower capacity and its share in a total generation is in terminal decline. In 1947, hydropower capacity was about 37 percent of the total power generating capacity and over 53 percent of power generation. In 2021-22, the share of hydropower generation capacity (not including small hydropower and pumped storage) was just over 11 percent and its share in power generation was also just over 11 percent of the total. To increase investment in the hydropower sector and facilitate growth, the government opened hydropower generation to the private sector in 1991. However, the share of the private sector in hydropower generation capacity is less than 10 percent today, the lowest compared to over 96 percent in the renewable energy sector and 36 percent in the thermal power generation segment.

Phases of Hydropower Development

From 1947-67, hydropower capacity development grew by over 13 percent and power generation from hydropower stations grew by 11 percent. This was a period of state-led growth in constructing large multipurpose storage dams. The state-sponsored the construction of large dams, labelled ‘temples of India’, for providing irrigation and for generating electricity. In the two following decades (1967-87) hydropower capacity development grew by 18 percent but generation grew by just over 5 percent. In this period, rapid scaling up of coal-based power generation started displacing hydropower generation and most of the large dams built were used for canal-based irrigation. Groundwater pumping accelerated across the country driven by electricity tariff subsidies at the state level, but it was coal that supplied most of the power. The decline in hydropower capacity development continued from 1987-2007 with both the growth of capacity addition and generation falling to about 3 percent. Social and environmental opposition to large dams that started in the 1980s gathered momentum in this period. Though hydro-power generation was open to the private sector both capacity addition and generation fell to about 1 percent in 2007-2019.

Enabling Policies

Since the partial liberalisation of the Indian economy in 1991, a series of policies that enabled the entry of the private sector in hydropower generation was implemented.  In 1991, hydropower generation was opened to the private sector and a 16 percent return on equity was allowed in 1992. In 1998 the hydropower policy was formulated to facilitate the development of hydropower projects in the North and Northeast of the country that held huge potential. In 1995, the government issued a notification providing a two-part tariff for hydel generation stations that addressed some of the concerns of private developers. The notification of the electricity act 2003, the national electricity policy 2005 and the tariff policy 2006 favoured private investment in electricity generation. The 2007 policy for rehabilitation and resettlement of people affected by industrial projects addressed one of the key concerns over hydropower projects.  In 2003, the government launched the 50,000 MW hydropower initiative to expedite hydropower development. The policy intended to fast-track land acquisition and environmental clearances. This central government policy was followed by several state-level policies to promote private sector participation in hydropower development, with state electricity boards (SEBs) retaining authority to select developers to execute projects.  In 1996, all hydro projects estimated to involve a capital expenditure above INR 1 billion required techno-economic approval from the central electricity authority (CEA) later raised to INR 2.5 billion. For projects selected by state government bodies through competitive bidding, the exemption limit for CEA techno-economic clearance was raised to INR 10 billion.  This long rope offered to the private sector-led to the embrace of run-of-the-river (RoR) projects.

Role of the Private Sector: Run of the River Projects

In theory, RoR hydropower projects, unlike traditional hydropower schemes, do not impound water behind a dam in a large reservoir and work with the natural flow of the river. They make use of the natural flow of the running water by diverting it through tunnels over a certain elevation drop to generate power. The water is then released into the river channel after power generation. The absence of a large reservoir avoids the displacement of local communities. The use of natural flow, likewise, is considered to have a limited impact on the ecology of the river.  For the private investor RoR hydro projects translated into lower capital costs (compared to storage dams), lower lead times, and less conflict with the local environment and the local population. Most importantly it meant attractive revenue streams would start flowing much earlier than in the case of storage dams.  India’s Hydropower Policy 2008 contained a number of generous concessions, that insulated private companies from the majority of the hydrological and financial risks inherent to the sector. These risks were transferred to the public maximising the margin for profits for the private developer by raising the costs of power. The tariff regime for hydropower gave power producers no economic incentive to optimize project designs according to comprehensive hydrological data. Private developers projected high-capacity potential for projects as they were to be paid for full “design energy” generation, even when water is scarce and power generation is low, whilst buyers pay more for less electricity.

The Himalayan states rushed into awarding hydro-power projects to private developers through what came to be known as the MoU (Memorandum of Understanding) route. Experienced and inexperienced private developers aggressively competed with each other to win projects from Himalayan states expecting windfall profits from favourable policies. The press reported that the expectation of hydro-dollar wealth had resulted in the MoU virus taking over the Himalayan states. About a decade later, private developers were competing with each other once again to walk out of hydro-projects as positive assumptions over environmental, social and financial outcomes proved to be false.


The private sector often portrays the entrenched role of the government in the Indian energy sector as a liability. However, the private sector leveraged government dominance over the energy, water and environmental sectors at the central and state levels to enter a new relatively high-risk sector such as hydropower generation. The presence of the government enabled the ‘socialisation’ of the environmental, social and economic cost of hydro-projects essentially minimising risks for private investment. The use of contracts and auctions rather than open markets to attract investment enabled the marginalisation of expert opinion on environmental issues, hydrological challenges and social participation. The costs determined contractually were passed through to consumers administratively rather than through responsive price mechanisms.

The government’s rush to meet ambitious targets for decarbonisation that enhances its global prestige is following roughly the same route of minimising risk and maximising reward for the private sector involved in renewable energy projects. Only time will tell if the private sector eventually decarbonises India’s energy system and provide abundant and affordable clean energy to all.


Monthly News Commentary: Coal

Coal Imports fill Supply-Demand Gap


Coal Block Auctions

According to Coal Ministry with the target to minimise the import of thermal coal, Coal India Limited (CIL) is going to offer its 20 closed/discontinued underground mines to private players on a revenue-sharing model. As per the ministry, a continuation of mining activities will help in increasing coal supply to thermal power plans whilst creating employment opportunities for local people. India has the 5th largest reserve of coal in the world and the government’s aim is to increase domestic coal production to 1.2 billion metric tonnes by FY 23-24.


CIL is set to launch its own e-auction platform, and the mining major has informed new and existing bidders to register on the portal. At present, the e-auction portal is managed by mjunction and MSTC Ltd. E-auction sales account for around 120 million tonnes (MT) annually for CIL, whilst the rest is sold through fuel supply agreements and other special sales windows. The miner’s dedicated e-auction portal has been developed by National Informatics Centre and supported by CIL subsidiary Central Mine Planning & Design Institute Ltd. E-auction of Coal India is executed in a 60:40 ratio between mjunction and MSTC. The Centre is also planning to introduce a coal exchange after taking into account consumer feedback.


NTPC Ltd has invited bids to procure imported 4.53 MT coal mainly for blending with the domestic dry fuel in thermal plants. The NTPC tender for the import of coal assumes significance in view of the ongoing dry fuel shortage at power plants. The power ministry had directed all the states and gencos (electricity-generating firms) to import at least 10 percent of their requirement of coal for blending amid shortages at thermal plants. The tender documents showed that NTPC has floated three separate tenders for procuring 4.53 MT – 1.5 MT, 1.6MT and 1.43 MT – of imported coal on 7 May 2022. The company had invited bids to procure 4.93 MT of imported coal last month. It has been mandated to procure 20 MT of imported coal in 2022-23 for blending with the domestic dry fuel at its thermal plants because of the ongoing shortage.

Three of India’s most industrialised states plan to import 10.5 MT of coal in the coming months as officials scramble to arrest widespread power cuts, a move that could push global coal prices to new highs. The scale of the purchases and the decision to go back on a plan to cut coal imports underscore the severity of India’s fuel crisis. Utilities’ coal inventories are at the lowest pre-summer levels in at least nine years and electricity demand is seen rising at the fastest pace in at least 38 years. Maharashtra plans to import 8 MT for “blending purposes,” whilst Gujarat will place orders for 1 MT, the states’ energy officials told the federal government on 13 April. The Tamil Nadu government-run utility said the state was targeting importing 20 percent of its coal requirements, adding that it had already placed orders to import 1.5 MT. The move by India, the world’s second-largest coal importer, could lead to a further increase in global prices, which are already trading near record highs due to fears of a supply crunch following the European Commission’s decision to ban coal imports from Russia after it invaded Ukraine. Coal miners in South Africa, Australia and Indonesia are likely to be the main beneficiaries of India’s buying spree, though those producers are already stretched by the recent spike in demand. India’s federal government has also asked the state governments of Karnataka, Uttar Pradesh, Madhya Pradesh, Punjab and Haryana to import a total of 10 MT of coal. Whilst Punjab has committed to import 625,000 tonnes, the other states have not detailed any plans. Maharashtra’s expected 8 MT of coal imports will be in addition to the 2 MT it had already ordered, for which delivery is expected on 8 May. India had previously asked state government-run utilities to import 4 percent of their coal requirements for blending but subsequently suggested that imports be boosted to 10 percent of the quantity needed to address soaring power demand. Federal government-run NTPC Ltd, the country’s top electricity producer, plans to boost coal imports to the highest level in eight years.


India fell short of domestic coal supply targets to utilities by 7.6 percent in April, as output from mines owned by companies for self-use was 33 percent lower than required and a shortage of trains for delivery further exacerbated a crippling power crisis. India faced its worst power crisis in over six years in April as demand hit a record high. Local supplies are crucial as coal inventories at utilities are at the lowest pre-summer levels in at least nine years and electricity demand is expected to rise at the fastest pace in nearly four decades.

Stating that ensuring adequate fuel supply to thermal power plants is its “priority”, public sector miner CIL has asked its employees to step up efforts and breach the production and offtake target of 700 MT for FY23. As per a letter from CIL its employees the company’s priority is to make sure that the electricity generating units are well stocked with domestic fuel amid the ongoing power shortage. The country looks up to CIL for fuelling its energy needs. CIL’s total offtake peaked at a record high of 662 MT in FY22, reflecting a sharp 15.3 percent growth over FY21. The FY22 supplies also took a leap of 13.7 percent and nine percent against pandemic-free fiscals of 2019-20 and 2018-19, respectively. The 87.4 MT annual increment in FY22 is more than the combined rise of 85.1 MT over the last six years. The coal ministry had earlier said that the ongoing power crisis is mainly on account of the sharp decline in electricity generation from different fuel sources, and not due to the non-availability of domestic coal. The ministry had attributed the low coal stocks at power plants to several factors such as increased power demand due to the boom in the economy post-COVID-19, the early onset of summer, a rise in the price of gas and imported coal and a sharp fall in electricity generation by coastal thermal power plants.

In a bid to help the state maintain power supply in the scorching heat, the railway board has cancelled eight express trains in UP (Uttar Pradesh) till further notice to provide hassle-free passage to coal laden freight trains for thermal power stations. The move came after consulting the UP government, which has recorded a steep surge in power demand amid rising mercury. Power Ministry emphasised recovering the power dues from defaulters.

For 16 years after allotment, Haryana’s coal block remained buried in the books, as everyone from the state and central governments to bureaucrats, the power department, and Haryana Power Generation Corporation Limited (HPGCL) was unaware that the state could be not just power surplus but also coal surplus on account of having its own mines. Had the governments acted in time, Haryana would have started getting coal linkage from 2018 onwards. In August 2006, the coal ministry had allocated the Mara-II-Mahan block with 955 million tonnes of reserves to the HPGCL and the Delhi government jointly. The block could not be developed for want of forest clearance from the environment ministry on account of amended laws and rules. The 53-square-kilometre coal block has a coal-bearing area of 30 sq km. In 2009, the two neighbouring states made a joint venture in Yamuna Coal Company (YCCPL) with equal stakes for the HPGCL and Indraprastha Power Generation Corporation Limited (IPGCL). Later, the IGPCL walked out of the deal and the sole rights came to the HPGCL. The provisional geological report of Ranchi’s Central Mine Planning and Design Institute in Jharkhand suggests that the coal block had an estimated 955 million tonnes of reserves with coal quality varying from grade A to G. In 2013, Haryana claimed that its power department had initiated the process of appointing consultants for exploiting these coal reserves. The total coal consumption in the HPGCL’s thermal power stations at Panipat, Yamunanagar, and Hisar is about 48,000 metric tonnes a day when operating at the rated capacity.

Amid rising power demand in the country due to a continued heat wave, India is staring at an electricity crisis accentuated due to a coal shortage at over 150 power plants. The coal stock position at the Central Election Authority (CEA) supervised 173 power plants stood at 21.93 MT, which is less than the regulatory requirement of 66.32 MT as of 21 April. Coal inventories had dipped to the lowest since 2014 at the beginning of the financial year to nine days as against the Centre’s mandated 24 days’ worth of stocks. Whilst on one hand, as per the CEA daily coal report, coal stock at 81 out of the 150 government-owned power plants is critical, on the other is the increased power demand — from 106.6 billion units (BU) in 2019, it increased to 124.2 BU in 2021 to 132 BU in 2022. States such as Punjab, Uttar Pradesh, Maharashtra, Haryana and Andhra Pradesh are witnessing power cuts amid low coal stocks. The Maharashtra government had declared that it is planning to import coal and acquire a coal mine from Chhattisgarh for power generation.

The coal ministry is in discussions with the World Bank for collaboration on the mine closure framework. As per the ministry, the government is committed to ensuring that mines are properly and scientifically closed for the benefit of society. The ministry had earlier said that as of now, the Indian coal sector is doing its best to fulfil the country’s energy demand by augmenting coal production. However, the Indian coal sector, the ministry had said, is relatively new to the concept of systematic mine closure. The ministry has, therefore, envisaged building an all-inclusive comprehensive nationwide mine closure framework to cover legacy mines, recently closed mines and mine closures scheduled to happen in the short term.


India’s antitrust body conducted raids at several small mining services companies for allegedly colluding on prices whilst offering services to the world’s biggest coal miner, CIL. Officers of the Competition Commission of India (CCI) raided companies in Kolkata in West Bengal state and Ranchi and Dhanbad in the eastern state of Jharkhand. The raids follow complaints from Bharat Coking Coal Limited, a unit of CIL, and were related to price rigging of tenders worth at least INR20 billion (US$260 million). The services rendered by the mining services companies under investigation are related to the extraction and transportation of coal.

Rest of the World


The global capacity of power plants fired by coal, the fossil fuel that emits the most carbon dioxide when burned, rose nearly 1 percent last year as the world recovered from the COVID-19 pandemic, according to a research report by a US (United States) environmental group. The Global Energy Monitor (GEM) report found that global coal plant capacity grew 18.2 gigawatts (GW) to about 2,100 GW or about 0.87 percent. Scientists and activists have urged the world to move off coal to cleaner energy sources such as solar and wind power and in some cases, nuclear power. Last year’s surge in new coal plants of about 25.2 GW in China, the world’s top climate polluter, nearly offset coal plant closures in the rest of the world of 25.6 GW, the report said. China has pledged to bring greenhouse gas emissions to a peak “before 2030” and achieve carbon neutrality by 2060. But its recent focus has shifted towards energy security, following disruptive power cuts and geopolitical uncertainties since Russia’s invasion of Ukraine. Countries like Germany have also been reconsidering using more coal to replace Russian natural gas. Despite last year’s capacity rise, the capacity of global coal plants being built in 2021 fell from 525 GW in 2020 to 457 GW, a decrease of 13 percent, the report said.


China’s coal imports surged 43 percent in April from March, driven by panic buying over concerns of supply disruptions stemming from Russia’s invasion of Ukraine. China shipped in 23.55 MT of coal last month, data from the General Administration of Customs showed. That compares with 16.42 MT in March and 21.73 MT in April 2021. For the period of January-April, China brought in a total of 75.41 MT of coal, down 16 percent from shipments in the same period a year earlier. Benchmark Newcastle thermal coal hit a record high of US$440 a tonne in early March, fuelled by fears of tight supply as Western countries vowed to impose sanctions on Russia’s financial system and energy products after it invaded Ukraine. As global coal prices stayed high whilst the Chinese central government ordered miners to boost domestic output and capped local prices, Chinese traders then shunned expensive seaborne cargos in favour of domestic sources. China aims to churn out a record 12.6 MT of coal each day and maintain coal prices under term contracts at 570-770 yuan (US$84.99-114.81) a tonne. China’s finance ministry has cut import tariffs for all types of coal to zero – from 1 May 2022, until 31 March 2023 – aiming to ensure energy security amid soaring global prices, but traders question whether it will drive up imports.

China will cut import tariffs for all types of coal to zero from 1 May 2022, until 31 March 2023, the finance ministry said, as Beijing strives to ensure energy security amid soaring global prices and supply disruption concerns. Import tariffs for anthracite and coking coal, mainly used in steelmaking, will be cut to zero from the current 3 percent, and rates for other kinds of coal will be down from 3-6 percent. China imported 323.33 MT of coal in 2021, about 8 percent of its total coal consumption. However, the removal of coal import tariffs is seen as having little impact on China’s coal purchases in 2022, as domestic output holds at record levels whilst sea-borne prices have surged to historically highs. Some traders said the move could benefit its imports from Russia. China’s spot coal prices are around 1,200 yuan (US$181.61) a tonne, with term-contract prices capped by the government at 770 yuan.

China’s decision to ban overseas coal financing ended 15 power projects in the planning stages with a capacity of around 12.8 GW, and could also stop another 37 GW of capacity currently in the pre-construction phase, new research showed. President Xi Jinping announced to the United Nations General Assembly in September that China, the world’s biggest energy consumer, would end overseas coal projects as part of its contribution to the global effort to cut climate-warming greenhouse gas emissions. The new guidelines indicate that more than a third of all new coal power projects outside of China and India will now be scrapped.

Rest of Asia and the Asia Pacific

Alternatives for Russian thermal coal are difficult to find as the market is getting tighter, Japan utilities group head Kazuhiro Ikebe said. The Japanese government said that it would ban coal imports from Russia in a broad escalation of sanctions after gradually reducing imports whilst looking for alternative suppliers.


Mining companies in South Africa have resorted to trucking coal to ports to meet a surge in European demand since the war in Ukraine started, bypassing the deteriorating rail infrastructure they blame for billions of dollars in lost revenue. Poor maintenance, a lack of spare parts for trains, copper cable theft and vandalism have disrupted state logistics firm Transnet’s freight rail services, causing coal and iron ore exports to fall in recent years. In April, Transnet declared force majeure on contracts with producers but with coal prices near record highs, mining firms including Glencore have turned to trucks. Trucking coal costs about four times more than rail, according to miner Menar. It has started using trucks but said the high coal prices mean miners can absorb the cost, for now. At Canyon Coal’s Khanye Colliery some 90 km (55 miles) from Johannesburg, it takes about 80 trucks – each carrying 34 tonnes – to replace one average Transnet train, making it unsustainable financially, boosting emissions and clogging roads.

News Highlights: 11 – 17 May 2022

National: Oil

India’s petrol and diesel sales rebound in May as a pick-up in economic activity

17 May: India’s petrol and diesel consumption jumped in May as a pick-up in the economic activity, as well as the start of the harvesting season, aided the return of demand, a preliminary industry data showed. Petrol sales grew 14 percent during the first half of May when compared with the same period in the preceding month, whilst diesel demand rose 1.8 percent. Cooking gas or LPG (liquefied petroleum gas), which saw consumption declining because of high prices, posted a 2.8 percent rise in sales during 1-15 May. Petrol sales by state-owned fuel retailers, which control roughly 90 percent of the market, at 1.28 million tonnes (MT) during 1-15 May were 59.7 percent higher than the same period last year and 16.3 percent higher than the period in 2019, data showed. The consumption was 13.9 percent more than the 1.12 MT of sales in the first half of April 2022. Diesel, the most-used fuel in the country, saw sales jumping 37.8 percent year-on-year to 3.05 MT in the first half of May. This was, however, 1.5 percent lower than sales in April 2019. It was 1.8 percent higher than 2.99 MT of consumption during 1-15 April this year.

No delivery charges for LPG cylinder consumers within 5 km: Kerala government

11 May: The government has clarified that the delivery charges for domestic LPG (liquefied petroleum gas) cylinders that are usually slapped on the consumer in addition to the bill amount are already included in the bill for consumers residing within 5 km from the agency. LPG cylinder prices crossing the INR1,000-mark recently has come as a major jolt to the consumers. It is in addition to this amount that the consumer is being asked to pay an additional delivery charge, irrespective of the distance factor.

National: Gas

CNG price increased by INR2 per kg in Delhi-NCR

15 May: The Indraprastha Gas Limited (IGL) has increased the price of compressed natural gas (CNG) in Delhi-NCR by INR2 per kilogramme (kg), with effect from 6 a.m. on 15 May. Following the latest price hike, CNG currently costs INR73.61 per kg in Delhi, INR76.17 in Noida, and INR81.94 in Gurugram. IGL has also raised gas prices in other cities as well. After the hike, CNG costs INR84.07 per kg in Rewari, INR82.27 in Karnal and Kaithal, INR85.40 in Kanpur, Hamirpur, and Fatehpur, and INR83.88 in Ajmer, Pali, and Rajsamand.

National: Coal

India coal stocks are under pressure owing to rail bottlenecks

12 May: India’s distributed coal stocks remain critically low as the country struggles to produce and transport enough fuel to meet surging demand from power generators. Power generators’ inventories are equivalent to just eight days’ worth of consumption compared with 16 days at the same point last year and before the pandemic. In a normal year, distributed inventories increase over winter, when lower temperatures reduce electricity demand and generation, and the end of the monsoon permits greater coal production. Coal is the bulkiest of all commodities so supply depends as much on enough distribution capacity as it does on mine output. Production increased by 26 million tonnes (9 percent) in the first four months of the year compared with the same period in 2021. Distribution rose by 29 million tonnes (11 percent) over the same period, statistics prepared by the coal ministry show. In common with other countries in other periods, including Britain and China, the rail network has emerged as a major constraint on boosting coal supplies. The total number of coal trains loaded and despatched every day in April 2022 was no higher than in April 2021, according to the ministry.

Chhattisgarh HC rejects five petitions challenging land acquisition for coal mining

12 May: In a significant decision, the Chhattisgarh high court (HC) has dismissed five petitions that challenged land acquisition for the Parsa coal block allocated to the Rajasthan Rajya Vidyut Utpadan Nigam Limited (RRVUNL) at Hasdeo Arand forest zone in Sarguja district, about 330 km north of Raipur. The petitions were filed against the move to acquire land for a Part coal block in accordance with the Coal Bearing Act. The petitioners had contended that private companies, according to the provisions of the Act, cannot engage or carry out the mining operations on land acquired but the RRVUNL has under a contract given the work to a private company for the mining operations. Parsa East-Kente Basan coal block in north Chhattisgarh was awarded to RRVUNL. The Adani Group has entered into an agreement as Mine Developer-cum-Operator (MDO) under a contract.

National: Power

Maharashtra nod to Adani for 1 GW power line to boost Mumbai supply

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

National: Non-Fossil Fuels/ Climate Change Trends

Himachal Pradesh invites bids to run 27 hydropower projects

16 May: The Himachal Pradesh government will allot 27 hydroelectricity projects of 722.4 MW combined tentative power generation capacity in Chamba, Kangra, Lahaul-Spiti, Kullu, Shimla and Kinnaur districts. It has invited bids from the private sector for running these projects on a ‘build, own, operate, and transfer (BOOT)’ basis. The developers will be required to pay the government a royalty in the form of free power from the projects. Of the 27 projects, 9 are in Chamba, 7 in Kinnaur, 5 in Kullu, 2 on the border of Chamba and Kangra, and one each in Kangra, Lahaul-Spiti, and Shimla, besides on the border of Lahaul-Spiti and Chamba. Detailed reports for 7 projects are ready, whilst the preliminary feasibility reports (PFRs) for the rest are available.

IREDA eager to promote green energy projects in Odisha

15 May: The Indian Renewable Energy Development Agency (IREDA) said it is keen to promote more green energy projects in Odisha and has already sanctioned loans worth INR6.7 bn within one year of opening its branch in the state. The IREDA, a public sector non-banking financial institution, has been engaged in promoting, developing and extending financial assistance for projects related to new and renewable sources of energy. The IREDA is keen to promote more renewable energy projects in Odisha, realising the immense green energy potential in the state. In August 2021, the IREDA opened a branch office in Bhubaneswar, following which the company sanctioned five hydropower projects with a total capacity of 80.5 MW and a 1.5 MW energy access project. The IREDA should also encourage solar rooftops, solar heating and solar lighting systems for household use in Odisha.

NTPC’s 20 MW solar capacity begins commercial operation at Kawas in Gujarat

14 May: NTPC Limited announced the beginning of commercial operation of the first part capacity of 20 MW out of 56 MW Kawas Solar PV Project in Gujarat. With this, the standalone installed and commercial capacity of NTPC has reached 54,616.68 MW. Further, the NTPC group installed and commercial capacity has touched 68,981.68 and 68,321.68 MW, respectively.

International: Oil

Exxon challenges California county’s denial of oil trucking permit

13 May: Exxon Mobil Corporation has gone to court seeking to force local California government officials to allow the shipment of crude oil from coastal facilities to inland refineries by dozens of tanker trucks a day until the replacement of a pipeline that burst in 2015, causing a major spill. Exxon claimed the board’s majority had essentially made up its mind to reject the application rather than deciding the issue on its merits, resulting in a “de facto ban on crude oil production and transportation.” Exxon asserts that the board’s action effectively prevents the company from restarting three offshore drilling platforms and refinery operations shut down after a badly corroded pipeline ruptured along the Pacific shoreline near Santa Barbara on 19 May 2015. As much as 3,400 barrels of crude oil escaped from the line, owned by Plains All American Pipeline. It marked the worst oil spill to hit the energy-rich but ecologically sensitive coastline northwest of Los Angeles since a 100,000-barrel blowout in the Santa Barbara Channel in 1969.

JAPEX to invest US$500 million to develop southern US tight oil interests

13 May: Japan Petroleum Exploration Company Limited (JAPEX) said its US (United States) unit would invest about US$500 million through 2024 to develop tight oil interests in the southern US, with production due to start in the middle of this year. The investments will be made under the wellbore interests it has acquired in Texas and Oklahoma, JAPEX said.

OPEC cuts 2022 world oil demand forecast again on Ukraine war

12 May: OPEC (Organisation of the Petroleum Exporting Countries) cut its forecast for growth in world oil demand in 2022 for a second straight month, citing the impact of Russia’s invasion of Ukraine, rising inflation and the resurgence of the Omicron coronavirus variant in China. OPEC said world demand would rise by 3.36 million barrels per day (bpd) in 2022, down 310,000 bpd from its previous forecast. The Ukraine war sent oil prices briefly above US$139 a barrel in March, the highest since 2008, worsening inflationary pressures. OPEC has cited suggestions that China, with strict COVID lockdowns, is facing its biggest demand shock since 2020 when oil use plunged. Nonetheless, OPEC still expects world consumption to surpass the 100 million bpd mark in the third quarter, and for the 2022 annual average to just exceed the pre-pandemic 2019 rate. The growth forecast for non-OPEC supply in 2022 was reduced by 300,000 bpd to 2.4 million bpd. OPEC cut its forecast for Russian output by 360,000 bpd and left its US (United States) output growth estimate largely unchanged. OPEC expects US tight oil supply to rise by 880,000 bpd in 2022, unchanged from last month, although it said there was potential for further expansion later in the year.

International: Gas

Poland’s PGNiG secures LNG supply from US firm Sempra

16 May: US (United States) energy firm Sempra Energy said it would sell 3 million tonnes (MT) of liquefied natural gas (LNG) each year to Poland’s PGNiG, in another sign of rising interest in US supply following Russia’s invasion of Ukraine. Buyers wary of importing natural gas from sanctions-hit Russia have been turning to US LNG in recent months as the war in Ukraine tightens an already under-supplied market. The US this year is expected to surpass Australia and Qatar as the world’s largest LNG exporters, delivering more than 12.2 billion cubic feet per day. Sempra will provide PGNiG (Polish Oil & Gas) with LNG for 20 years under the deal. About 2 MT of LNG per annum will come from Sempra’s Cameron LNG Phase 2 project in Louisiana, whilst the rest would come from the Port Arthur LNG project in Texas. PGNiG will also have the option in 2022 to reallocate volumes from the Cameron Phase 2 project to the Port Arthur project, Sempra said. PGNiG said the agreement opens the way to negotiate the terms of the futures contract for supply starting in 2027 on a free-on-board basis. The volumes will be received via a floating storage and regasification unit which Poland plans to operate on the Baltic Sea near Gdansk. LNG is one of the pillars of Polish plans to boost its energy security as it seeks full independence from Russian gas supplier Gazprom. PGNiG’s LNG supply portfolio with US partners currently stands at 7 MT or 9 billion cubic meters (bcm) after regasification. A contract with Sempra would boost that by more than 40 percent. Poland consumes about 20 bcm of gas annually.

Czechs plan new state energy trader to boost gas security

16 May: The Czech industry ministry plans to launch a new state energy trader whose main aim is purchasing gas as the central European country seeks to boost its energy security and shift away from dependence on Russian supplies. The Czech Republic is nearly 100 percent dependent on its gas from Russia, which cut supplies to Bulgaria and Poland last month after they refused to pay for it in roubles as demanded, sparking concerns other European Union countries could be similarly hit. Industry Minister Jozef Sikela said the new trader would concentrate on gas supplies at the start and it would make purchases to help cover the state’s consumption. Gas imports are currently made by private companies. Sikela said gas storage levels in the country have reached over 40 percent, above levels of just below 30 percent at this time one year ago. Sikela said having a state trader would also increase the state’s influence on gas storage in the country.

Ukraine restarts gas distribution stations, supplies in Kharkiv

16 May: Ukraine’s gas transit system operator said that it had resumed operations at two distribution stations in the Kharkiv region and restarted gas supply to more than 3,000 consumers. Some 54 gas distribution stations in seven regions of Ukraine remain shut down, the operator said.

Italy and Spain consider a joint gas pipeline project

13 May: Italian energy infrastructure company Snam has signed an agreement with Spain’s energy provider Enagas to explore the construction of an offshore gas pipeline between the two countries. Snam, Europe’s major energy pipeline operator, announced the move as European countries are searching for alternative gas suppliers as Russia-Ukraine tensions rise. Russia has been a major supplier of gas to European states. Connecting Italy to Spain is significant, given that Spain has the largest capacity for re-gasifying liquefied natural gas (LNG) in the European Union (EU). But the country’s pipeline connection with most of the rest of the EU is limited because of the high Pyrenees Mountains that form the border between Spain and France. The deal between Snam and Enagas would work around that problem by laying the pipeline under the Mediterranean Sea.

International: Coal

US coal companies struggle to cash in on Europe crunch

17 May: United States (US) coal producers are seeking to boost exports to cash in on soaring prices since Russia’s invasion of Ukraine but face big headwinds including shipping bottlenecks, labour shortages, and a dismal long-term outlook discouraging investments in new mines. The outlook means the US, which holds the world’s biggest reserves of coal, is unlikely to play a major role in international efforts to expand shipments of the fuel to Europe ahead of an expected European Union ban on Russian imports this August to punish Moscow for the invasion. It also means the rally in global coal prices is unlikely to pull the US coal industry out of a more than decade-long tailspin driven by federal and state efforts to slash carbon emissions that have led utilities to replace coal with cleaner-burning natural gas, and solar and wind power. US President Joe Biden has set a goal to decarbonize the US power grid by 2035 to fight climate change. US coal production year-to-date is up 3.8 percent from the same period in 2021 at about 203.7 million short tons, according to the latest data from the Energy Information Administration, marking a slight recovery from the depths of the COVID-19 pandemic when output hit the lowest level since 1965. But exports have not kept up. Shipments of US coal abroad in the first quarter of 2022 slipped about 2.5 percent year on year to about 20.2 million tons, the EIA (Energy Information Administration) said. And the logistics hurdles prompted the EIA to lower its 2022 US coal export forecast to 85.7 million tonnes (MT), down about 3.7 percent from its previous prediction in April. The EIA said US exports are expected to rebound about 3.6 percent in 2023 to 88.8 MT.

International: Power

Russia cuts power exports to Finland over failed payments

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

South Africa’s Eskom increases the length of a daily power cut at the start of the week

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

Texas grid operator calls for power conservation as temperatures, and prices soar

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

International: Non-Fossil Fuels/ Climate Change Trends

New Zealand sets US$357 mn to help pay for cleaner cars to reduce emissions

16 May: New Zealand’s government said it will help pay for lower-income families to scrap their old gas guzzlers and replace them with cleaner hybrid or electric cars as part of a sweeping plan to reduce greenhouse gas emissions. The government said it plans to spend 569 million New Zealand dollars (US$357 million) on the trial programme as part of a larger plan that includes subsidies for businesses to reduce emissions, a switch to an entirely green bus fleet by 2035, and curbside food-waste collection for most homes by the end of the decade. This is a landmark day in our transition to a low emissions future, Prime Minister Jacinda Ardern said. The plan represents a step toward the pledges the nation made under the 2016 Paris Agreement on climate change and New Zealand’s stated goal of achieving net-zero carbon emissions by 2050. Ardern said every community and sector had a role to play and that reducing reliance on fossil fuels would help shield households from volatile price hikes.

IEA expects record renewable growth despite the cost, supply problems

11 May: Rising concerns over energy security and climate change will galvanize record new capacity to generate renewable power in 2022, the International Energy Agency (IEA) forecast. The IEA forecasts that 320 gigawatts (GW) will come online this year, equivalent to top European economy Germany’s total annual demand, up from a previous record of 295 GW in 2021. Last year’s additions, which were driven by the growth of solar energy in China and Europe, exceeded the Paris-based agency’s expectations it said in a new report on renewables.

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

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