MonitorsPublished on Apr 04, 2023
Energy News Monitor | Volume XIX, Issue 39

Quick Notes

Personal Electric Vehicles in India: Will Incentives Overcome Inhibitions?

Policies, Incentives & Targets

In April 2011, a cabinet decision was made to launch a National Electric Mobility Mission (NEMM). A three-tier apex body consisting of the national council on electric mobility (NCEM), the national board on electric mobility (NBEM) reporting to the national automotive board (NAB) was created. The NEMM plan for 2020 (NEMMP 2020) based on a survey of 7000 potential users in 25 cities envisaged a government-industry partnership to enable India to emerge as leader in the full range of electric vehicles (xEVs, where x that represents any electric vehicle- from mild hybrids to pure electric vehicles) with 6-7 million units by 2020.

In 2015, the scheme for ‘faster adoption and manufacturing of electric vehicles’ (FAME) was launched by the Ministry of Heavy Industries (MHI). Under Phase I of the FAME scheme, INR1.98 billion from a budget of INR7.95 billion was allocated. 150,000 xEVs, (39,000 electric two wheelers, 93,000 mild hybrid cars, 3300 full EVs and other strong hybrids) were sold.  Demand incentives for the various xEVs were based on their fuel saving potential with pure electric vehicles receiving the highest incentive per vehicle. Under FAME I, a rebate of INR 7,500 – 22,000 was offered for the purchase of 62 eligible models. About 40 percent of the eligible models were low-speed (maximum of 25 kilometres per hour [km/h]) and they represented 80 percent of electric two-wheelers (e2W) sales. e2W sales made up less than 1 percent of the vehicle market share, but purchase subsidies did stimulate their uptake. Until September 2018, around 90 percent of the beneficiaries under FAME I were lead-acid battery powered low speed e2Ws.

In 2019, the Government approved Phase-II of the FAME Scheme with an outlay of INR100 billion for 3 years. About 86 percent of the fund was earmarked for demand incentives for xEVs supporting 7000 e-Buses, 500,000 e-Three Wheelers (e3Ws), 55,000 e-Four-Wheeler Passenger Cars (including Strong Hybrid) and 1 million e2Ws. As of February 2021, about 49,000 xEVs were sold under the scheme.  Buses were to receive 41 percent of the incentives followed by 29 percent for e2Ws and 23 percent for e3Ws. FAME II specified a maximum sticker price of about INR1,500,000 (INR15 lakhs) for cars to be eligible, making most of the available electric car models beyond the scope of the scheme. Sales of electric cars declined in 2019 and sales of e2Ws also fell by 94 percent as FAME II excluded lead-acid battery driven vehicles for incentives.

The central government provides an income tax deduction of INR150,000 for up to three years on the interest paid on loans taken to purchase an EV. All the vehicles sold at an ex-showroom price of more than INR1 million are eligible for a rebate of 1 percent of that price. Goods & Services Tax (GST) based on the ex-factory price of an EV is 5 percent compared to 29-31 percent for internal combustion engine (ICE) cars. Exemption from road tax and registration charges applies to all battery-enabled cars.

To facilitate uptake of EVs, the Model Building By-Laws from 2016 mandates that 20 percent of parking space within residential and non-residential complexes is provided for EV charging infrastructure. The maximum tariff that can be charged by a public charging station is set at 15 percent above the average cost of supply.

State governments have also launched incentive programmes to complement FAME schemes of the Central government.  For example, Delhi has offered a subsidy of INR30,000 for e2Ws and e3Ws a subsidy of INR 150,000 for e4Ws.


In 2019, the pre-pandemic year, over 24 million vehicles were registered.  Of these, 2Ws accounted for about 77 percent, 3Ws about 3 percent and 4Ws about 19 percent. In 2022, over 21 million vehicles were registered. 72 percent of these were 2Ws, 24 percent was 4Ws and about 3 percent 3Ws. In 2019 ICE vehicles accounted for over 99 percent of registrations. In 2022, the share of ICE vehicle registrations was about 95 percent with electric vehicles accounting for remaining 5 percent.  In 2023, there was a stock of roughly just over 2 million xEVs in India. Of this just over 57 percent was e3Ws and 39 percent e2Ws accounting for over 96 percent of EV stock. According to the MHI website, total incentives INR 44 billion has been spent on EVs though over what time period is not specified.  On average, this is about INR 11,000 of federal incentive per EV. State incentives could bring the average incentives to about INR 20,000 per EV.

In India 85 percent of the ICE 2W market is concentrated at less than INR 90,000 and 78 percent of the ICE 4W market is concentrated at less than INR 1 million price points. EVs with comparable performance are not available at these price ranges. While the upfront cost of EVs is higher (2-3 times), their operating cost is significantly lower. This has led to adoption of the concept of “total cost of ownership” (TCO) which is lower for EVs. This is partly because electricity is cheaper than petrol and diesel that are heavily taxed. Petrol and diesel are net contributors to the exchequer while electricity is a net drain on the exchequer. TCO of EVs is lower also because EVs have fewer moving parts which reduces maintenance costs. But costs that EVs eliminate in mechanics is more than made up by costs related to battery chemistry.

As in the case of mobile-phones, the battery of an EV starts to fade after a few years of use and either the battery or the car (with the battery) has to be replaced.  The risk of running out of charge (range anxiety) along with the fact that a deteriorating battery quickly destroys a car’s second-hand value are among the key issues that hold up purchase of EVs. In an EV the battery is the most expensive component, representing around 30 percent of the cost of an average mid-size vehicle. Once a battery’s capacity falls below 80 percent of its starting value, it is generally thought no longer suitable for use in the vehicle. The lithium-ion (Li-ion) batteries which power electric cars age in two ways: with time and with use. Li-ion batteries could lose 2 percent of their capacity in a year (calendar aging). This means that the vehicle is half way through its useful life in about six years. Each cycle of discharge and recharge takes its toll on the battery. Use-dependent ageing is a consequence of the number of discharge-recharge cycles a battery goes through. Regular fast-charging also reduces battery life, as do overcharging and deep discharging. Driving in extremely hot or cold weather has a negative impact on the battery.  Battery life diminishes if an EV is left unused. To provide buyers with some peace of mind, carmakers guarantee their batteries, typically for eight years or around 200,000 km.

If EVs were in every way as satisfactory as ICE alternatives, it would take little or no policy incentive to push the market towards EVs in India (and elsewhere). Fully electric vehicles are not yet perfect substitutes for ICE alternatives. They are more expensive, depreciate faster, and have a lower range of travel and more limited supporting infrastructure, like charging stations or properly equipped mechanics. Studies show that when EVs are good but not perfect substitutes for ICE vehicles, incentives including a ban on the production of ICE vehicles is a much less inefficient way to reduce emissions. But the degree to which EVs are good substitutes for ICE vehicles will change over time, and this will depend not only on the capabilities of EVs but also on developments such as the reduction in work related commutes and the level of automation in vehicles. Until then, relatively poor countries like India will have to continue with incentives for EVs to compensate for the inhibitions of EV ownership.

Source: International Energy Agency, Global EV Outlook 2020;
Note: The extent of purchase subsidies depends on the type of EV and other specifications.  In general battery powered EVs get maximum subsidies. The chart does not cover subsidies for fuel cell electric vehicles which are over US$20,000 per vehicle in Japan and S Korea.

Monthly News Commentary: Power

Distribution Reforms Make Slow but Steady Progress


Discom Reform

Haryana government has succeeded in reducing the electricity distribution and transmission losses to 13.43 percent, which was 25 to 30 percent during the rule of previous governments. Giving relief to the consumers, the government has not made any change in the electricity rates. The state has more than 7.6 million consumers of all categories. It has been a great example of power management that despite the less availability of electricity many times the government provided electricity to the consumers. In 2022-2023 in category — INR2/kWh was charged from zero to 50 kWhs, while INR2.50/kWhs was charged from 51 to 100 kWhs.

Punjab State Power Corporation Limited (PSPCL) has decided to introduce prepaid smart meters for all its existing and new connections in the government departments. After these pre-paid meters are installed, the departments will have to make advance payment for their energy future consumption. The decision on government departments over prepaid metering systems, up to contract demand of 45 KVA, will start being implemented from 1 March. However, the PSPCL will serve these departments a 15 days’ notice, comprising details of last 12 months’ energy consumption and billed amount for respective consumers. PSPCL will procure and install pre-paid meters at its own cost and consumers are not required to pay any meter cost for the prepaid metering system. Government departments will have to make advance payment for connections with prepaid meters. They will have to make a proper accounting system for advance payments at their end. These departments will also appoint a nodal officer for each connection and convey mobile number and e-mail ID to be registered in the PSPCL database. There shall be a 1 percent rebate on energy charges in case of prepaid meter connections, while the tariff for respective category connections shall be applicable. Sources in PSPCL said there were 53,000 connections with government departments that would be served 15-days’ notice. But, smart metering systems will not be imposed on government hospitals, water supply, and power connections related to medical and emergency services. Under the central government’s RDS Scheme, the state power utility is supposed to install pre-paid meters on 5 percent of its government power consumers by 31 March to avail the funds, whereas 100 percent departments will have to be covered till 31 March 2024.

The state government has decided to implement Revamped Distribution Sector Scheme (RDSS) with an investment of around INR110 bn (US$ 1.34 bn) with the support of the Union government. The scheme would help in strengthening the power distribution system, reduce losses and enhance operational efficiency. The RDSS will strengthen the power utilities to a large extent and help in providing high quality power to all categories of consumers. The government is taking special measures to increase the power generation capacity in the state in order to ensure uninterrupted power supply.

Demand Growth

India’s power consumption logged a double-digit year-on-year growth of nearly 13 percent to 126.16 billion units (BU) in January 2023, according to government data. The robust growth of power consumption indicates sustained momentum of economic activities in January. Experts earlier said the power consumption and demand would increase in January due to the use of heating appliances, especially in the northern parts of the country, and a further improvement in economic activities. In January 2022, power consumption stood at 111.80 billion kWh higher than the 109.76 B kWh in the same month of 2021, the data showed. The peak power demand met, which is the highest supply in a day, rose to 210.61 gigawatt (GW) in January 2023. The peak power supply stood at 192.18 GW in January 2022 and 189.39 GW in January 2021. The peak power demand met was 170.97 GW in the pre-pandemic January 2020.

Punjab’s maximum power demand has increased by about 800 megawatts (MW) or 26 percent from last year’s corresponding period till 12 January. Consumption has risen by almost 30 percent. PSPCL has supplied 1,821 million kWh of power in the first 12 days of 2023, compared with 1,396 M kWh in last year’s corresponding period. Power demand increased to 8,852 MW from 7,051 MW. Even in the current financial year, from April to December 2022, the PSPCL has supplied 9 percent more power to the state.


NLC India Limited (NLCIL) has proposed to increase its total power generation capacity from the present 6,061 MW to 17,171MW by 2030. The company has proposed to increase its thermal power generating capacity from the present 4,640 MW to 11,140 MW and the renewable power generating capacity from the present 1,421 MW to 6,031 MW by 2030. The company has proposed to increase its lignite mining capacity from the present 32.1 million tonnes per annum (MTPA) to 40.1 MTPA and coal mining capacity from the present 20 MTPA to 44 MTPA by 2030.

Regulation and Governance

Sri Lanka and India will sign a pact to link their power grids and start negotiations on an upgraded trade agreement within two months, as the island nation seeks a way out of its worst economic crisis in decades. India has provided some US$4 bn in assistance to its southern neighbour since the crisis hit early last year, but Sri Lanka is now seeking to enhance trade and investments as it moves to close a US$2.9 bn loan from the International Monetary Fund.

The power tariff order of Delhi for 2022-23 is yet to be announced by the city’s electricity regulator Delhi Electricity Regulatory Commission (DERC), even as the financial year is coming to an end. Ideally, the exercise should be completed before the next financial year starts, and a delay in announcement in tariff will affect consumers as well as distribution companies in the long run “financially”, according to people who track the power sector. The power tariff order is ready but its announcement has been delayed due to various reasons, DERC said. The power ministry had in a letter in 2021 directed all state and central power regulators to issue tariff orders before 1 April of a financial year. It had also said the tariff order should be cost reflective.

KSEB authorities disconnected power supply to several government offices in the Malappuram civil station over non-payment of power bills which has hit the functioning of many offices. The offices where power supply was disconnected included three offices of the education department, the office of the soil conservation department, the office of PWD roads section, scheduled castes development department and information and public relations department. KSEB said that it had to resort to disconnecting the power to the government office as the bills were not paid despite repeated reminders.

The Maharashtra State Electricity Distribution Company Limited (MSEDCL) issued public notice to propose a tariff hike of upto 15 percent for residential consumers from April. It has also proposed further 15 percent hikes in tariff in 2024-25, and this could be a huge burden to over 20 million (mn) residential consumers in parts of Mumbai, Thane, Navi Mumbai, Kalyan, Vasai-Virar and rest of Maharashtra. The power discom has a total over 28 mn consumers including those from agriculture, industry and commercial establishments. MSEDCL proposes to reduce its distribution losses, which were around 18 percent in 2019-20 to 14 percent by April. The reduction in losses is due to a major crackdown on power theft cases across the state in the past one year.

DERC has withdrawn its 2018 advisory to the Delhi government that power subsidy should be granted to the eligible beneficiaries through direct benefit transfer (DBT) mode, as done in the case of LPG cylinders. The advisory was withdrawn on 24 December, just a day after deputy Chief Minister office wrote to DERC saying it had received a file from the power department suggesting that the government should shift to the DBT mode on power tariff subsidy and wanted the commission to re-examine the issue. Interestingly, DERC re-examined the issue and withdrew its earlier advisory of switching to the DBT mode of February 2018 just a fortnight before the term of the former chairman of the commission was ending. The commission said that the adjoining states of Haryana, Uttar Pradesh, Rajasthan and Himachal Pradesh were not using the DBT model for providing the electricity subsidy.

Rest of the World

Africa & Middle East

Lebanon’s caretaker government approved opening credit lines totalling US$116 mn to help fix its crippled state electricity grid. The cash-strapped country for over two years has struggled with rampant power cuts that have crippled much of public life, worsening a broader economic crisis that has pulled over three-quarters of the country’s population into poverty. Today, households only receive about an hour of state electricity per day, with millions now relying on expensive private generator suppliers to power their homes. Lebanon’s state electricity company has bled state coffers dry for decades, costing the government over US$40 bn with annual losses of up to US$1.5 bn. The country’s two main power plants have occasionally broken down and require heavy maintenance. The World Bank and International Monetary Fund say restructuring the country’s energy sector is a key reform for the country to pull itself from the mire.

Asia Pacific

Asia will for the first time use half of the world’s electricity by 2025, even as Africa continues to consume far less than its share of the global population, according to the International Energy Agency (IEA). Much of Asia’s electricity use will be in China, a nation of 1.4 billion people whose share of global consumption will rise from a quarter in 2015 to a third by the middle of this decade, the IEA said.

Pakistan’s generators produced more power than was required, causing voltage fluctuations that culminated in a system collapse that plunged 220 million people into darkness, an internal government document showed. Complete grid failures are rare, and operators of modern grids count local shocks from integration of renewable energy as their primary challenge. But the blackout in Pakistan was its second near-complete grid failure and the third in south Asia in three months. The blackout was triggered by the power grid’s frequency rising to 50.75 hertz (hz) early, causing severe voltage fluctuations in transmission lines in the south, according to the internal note. A frequency over 50 hz indicates the power generated exceeds demand, while a frequency under 50 hz points to supply falling short of demand.

The Tokyo Electric Power Company Holdings Inc. (TEPCO) has applied to the government to raise its regulated electricity rates for households by around 30 percent from June in response to surging energy prices and the yen’s weakening. The rate hike application, following five other major power companies which have already filed for the government’s approval to raise prices by between 28 percent and 46 percent from April, reflects a deteriorating business performance due to soaring prices of fossil fuels such as liquefied natural gas (LNG) and thermal coal for power generation. Japan’s industry ministry will examine details of TEPCO’s cost reduction measures and decide on the actual rate increase. TEPCO president Tomoaki Kobayakawa said that the company would have problems ensuring stable supplies of electricity if it leaves the situation as it is. The hike in the regulated rates would be the first for TEPCO since 2012 when it raised the rates in the aftermath of the 2011 Fukushima nuclear disaster.

Europe & Russia

Poland has urged the European Union (EU) to use upcoming reforms to Europe’s electricity market to do more to support investments in nuclear energy. The EU is set to propose a power market upgrade next month, to attempt to avoid a repeat of last year when cuts to Russian gas supply sent European power prices soaring, since gas plants often set overall electricity prices in the current EU system. Poland said the EU should also make it easier for countries to launch electricity capacity mechanisms and temporarily lift an emissions limit – which could allow such schemes to support coal power. In a capacity mechanism, a government pays power plants to guarantee they remain available to produce electricity when needed. Current EU rules only allow countries to do this as a last resort, and Brussels has raised concerns that the schemes may distort competition in energy markets. The EU has said its upcoming reforms will aim to expand Europe’s use of long-term contracts that provide power plants with a fixed price for their electricity, to try to make energy bills more stable and less tied to volatile short-term markets. Poland said it would support expanding these types of contracts.

News Highlights: 22 – 28 February 2023

National: Oil

India bans oil tankers, bulk carriers older than 25 years

28 February: India has withdrawn trading licences for oil tankers and bulk carriers that are more than 25 years old, its shipping regulator said, as the world’s third-largest greenhouse gas emitter looks to cut emissions and reduce the average age of its fleet. The order bans acquisition of such vessels that are more than two decades old. Under current guidelines, vessels that are less than 25 years old can be acquired without any technical clearance. The average age of Indian fleet has been increasing in the recent years, bucking a global declining trend. The regulation requires oil tankers older than 15 years to improve their working condition and subjects bulk carriers to additional checks to ensure adherence to high international standards. The new norms would also apply to foreign vessels discharging in India, the regulator said, adding that existing vessels affected by the new cap on lifetime of operating vessels shall be allowed to sail for three more years, regardless of their current age.

ONGC to invest US$2 bn to drill 103 wells in Arabian Sea, will raise oil, gas output by this much

23 February: Oil and Natural Gas Corp (ONGC) said that it will put in over US$2 billion in drilling 103 wells in Arabian Sea as it works on a turnaround plan that is aimed at adding 100 million tonnes to production. ONGC has three main assets off the west coast: Mumbai High, Heera and Neelam, and Bassein and Satellite, which contributed the bulk of 21.7 million tonnes of oil and 21.68 billion cubic metres of gas it produced in 2021-22. The development is estimated to enhance production by over 100 million tonnes of oil and oil equivalent gas over the life of the field and the investment involved in drilling and facilities will be over US$2 billion. ONGC produces two-third of the total oil and gas produced in India, and the incremental production from the development will help the country cut dependence on imports to meet its energy needs. India imports over 85 percent of the crude oil, which is later converted into fuels such as petrol and diesel; and imports almost half of the natural gas that produces electricity, makes fertilisers and provides CNG.

National: Gas

Adani Total to start operations at Indian LNG terminal by mid-June

24 February: Adani Total Private Ltd will receive its first liquefied natural gas (LNG) cargo at the Dhamra terminal on India’s east coast in April and expects to start commercial operations 30 to 45 days after receiving the shipment, the Adani Group said. The start-up of the 5 million tonnes per annum (mtpa) LNG import terminal, delayed from September 2021, is crucial to Prime Minister Narendra Modi’s plan to boost natural gas use in the country’s energy mix to 15 percent from about 6 percent currently. The Adani Group’s first LNG import terminal will boost gas use in India’s east, where the Dhamra project is only the second import terminal. The country’s five other import terminals are on its western coast. Adani Total expects to receive 2.2 million tonnes (MT) of LNG at Dhamra in the year to March 2024, the company said. It has a 20-year take-or-pay contract to provide regasification services to state-run Indian Oil Corp (IOC) for 3 mtpa of LNG and 1.5 mtpa for government-run gas distributor GAIL (India) Ltd.

ABB India begins operation of gas insulated switchgear manufacturing plant in Nashik

24 February: ABB India announced commissioning of a factory in Nashik to manufacture gas insulated switchgear (GIS). The company aims to serve customers across various industries, including power distribution, smart cities, data centres, transport (metro, railways), tunnels, ports, highways and other infrastructural developments, ABB India said. ABB is a technology leader in electrification and automation, enabling a more sustainable and resource-efficient future.

National: Coal

Centre agrees to waive RSR mode condition for coal supply to Punjab: CM

28 February: Punjab Chief Minister (CM) Bhagwant Mann said the Centre has agreed to waive the mandatory rail-sea-rail (RSR) mode condition for coal supply from Mahanadi Coalfields Limited (MCL) to Talwandi Sabo Power Limited (TSPL) in the State. Mann said the Union Power Minister R K Singh had apprised him that as far as transport of coal is concerned, the Government of India does not specify any particular route or port and transport is entirely the responsibility of the concerned States or generators, adding that additional coal can be allotted to Punjab from MCL and if Punjab can transport it through any other mode, it is welcome to do so. Punjab’s ruling party AAP had earlier slammed the Centre for asking the State Government to lift coal using rail-ship-rail (RSR) mode, claiming that it would put additional financial burden on the State power utility. The power ministry had asked power utility Punjab State Power Corporation Limited to start lifting 15-20 percent of its domestic coal requirement through rail-ship-rail mode.

Most of auctioned coking coal mines to start production by 2025

27 February: Most of the 10 coking coal blocks that have been auctioned to the private sector in the last two years are likely to start production by 2025, according to the Coal Ministry. To augment the output of raw coking coal, a key input in the production of iron and steel, in the country, the ministry has auctioned 10 coking coal blocks to the private sector. These mines have peak rated capacity(PRC) of 22.5 MT. Domestic raw coking coal production is likely to reach 140 million tonnes (MT) by 2030. Coal India Ltd (CIL) which accounts for over 80 percent of domestic coal output has planned to increase raw coking coal production from existing mines up to 26 MT and has identified nine new mines with PRC of about 22 MT.

SC to hear pleas related to coal block allocation in Chhattisgarh

27 February: The Supreme Court (SC) said it will hear on 14 March the pleas related to a coal block allocation in Chhattisgarh to the Rajasthan Rajya Vidyut Utpadan Nigam Limited (RRVUNL) and mining operations by Adani Enterprise Limited (AEL). The State firm had made a statement in October last year before the court that no coal will be extracted before the matter is heard.

Coal production up 16 percent to 698 MT during April- January in this fiscal

24 February: Coal production grew by 16 percent touching 698 million tonnes (MT) during April-January period of the current fiscal, against 601 million tonnes production recorded during the corresponding period of last year. According to coal ministry, during the above mentioned period, Coal India Limited (CIL)’s production rose by 15.23 percent to 550.93 MT against 478.12 MT recorded during the corresponding period of last year. The increase in domestic coal production has helped the country curb import to a large extent in the face of sharp increase in coal demand, arising due to continuous rise in power consumption. The coal ministry has fixed the target of 1.31 billion tonnes (BT) for 2024-25, which it expects to go up to 1.5 BT by 2029-30. The ministry has been actively engaging with various state governments and central government agencies for starting new coal mines and enhancing coal production in the currently operational mines.

Raijharan villagers’ agitation paralyses Nalco coal mine

23 February: Nalco Coal Mine Utkal-D has been paralysed for the last three days due to an agitation by the affected tenants of Raijharan panchayat in Angul block. The villagers have vowed not to call off the strike until their demands are met. So far, no company or official has visited the strike spot. Utkal-D coal block has been allocated to public sector national Aluminium Company. Nalco, in turn, has outsourced the work of coal extraction, infrastructure development and dispatch of coal to its captive power plant to a private coal company – Mytri Company. The coal mine is a captive coal mine and all its coal will go to Nalco power plant only.

National: Power

Government gears up to ensure uninterrupted power supply in summer

27 February: Uttar Pradesh (UP) Chief Minister (CM) Yogi Adityanath government has started preparations on a war footing to ensure uninterrupted power supply in summer in the wake of early advent of the season, for the convenience of the citizens of the state. Uttar Pradesh Power Corporation Limited (UPPCL) chairman M Devaraj said that 2,51,059 transformers had been changed in this financial year to improve the power system. Similarly, he said, 17,782 kilometres of AB cable had been installed to prevent electricity theft. Besides, 51,550 private tube wells had been classified in this financial year to increase irrigation facilities in the state, he said.

UPCL anticipates rise in power demand, seeks supply from Centre

27 February: With mercury levels rising in February itself, signalling an early summer, state discom, Uttarakhand Power Corporation Limited (UPCL) has estimated the electricity demand in the state to go up to 50 million units (mu) per day against the present requirement of 41mu. Of the total demand of 41mu per day, only 38mu is available in the state having the country’s major rivers — Ganga and Yamuna, which are harnessed for producing hydropower. The shortage is adjusted through the power supplied from the central pool, open market or power cuts. To meet the possible rise in demand during the summers, UPCL has demanded an additional supply of 300 megawatt (MW) from the Centre.

Adani Power promised to supply power in reduced price to Bangladesh

24 February: India’s Adani Power promised to supply electricity to Bangladesh at a reduced price keeping consistent with the generation cost in the country’s existing coal-fired plants. The Adani will import the coal for its plants at the same price the Bangladeshi coal-run plants do for themselves. Bangladesh’s state-run Power Development Board (PDB) sought to revise to a 2017 power purchase agreement with Adani Power Ltd as the price for the coal-generated electricity appeared too expensive. Bangladesh currently imports 1,160MW of electricity from India while the 2017 agreement it is supposed to buy electricity from Adani Power Ltd for 25 years and start getting electricity from March this year.

Power ministry seeks enquiry on DERC for not following statutory orders

23 February: The power ministry has asked an appellate tribunal to conduct an enquiry on the grounds that provisions of the Electricity Act, and orders of statutory bodies and courts were allegedly not being followed by the DERC. The ministry in a reference to the chairperson of the Appellate Tribunal for Electricity (APTEL) has also sought to build a case for the removal of a member of the Delhi Electricity Regulatory Commission (DERC) on the ground of “proved misbehaviour” under Section 90 (2)(f) of the Act. However, a DERC source claimed that the move by the ministry was “irrelevant” as only the Delhi government can invoke Section 90 provisions against a member of the commission and not the Centre. The Electricity Act, 2003, provides that the power tariff should be cost reflective and it mandates that the appropriate commission while determining the tariff will be guided by the objective that the tariff progressively reflects the cost of supply of electricity and also reduces cross subsidies within a specified period.

National: Non-Fossil Fuels/ Climate Change Trends

Karnataka, Gujarat make most progress in clean energy transition

27 February: Karnataka and Gujarat are the Indian states making the most progress in overall preparedness and commitment in the transition to clean electricity, a new joint report from the Institute for Energy Economics and Financial Analysis (IEEFA) and Ember showed. The report analyses 16 Indian states, which together account for 90 percent of the country’s annual power requirement, across four dimensions. The dimensions track a state’s preparedness to shift away from fossil fuel-based power, its ability to incentivise greener market participation, its power system’s reliability and policies pushing for power sector decarbonisation. India’s revised Nationally Determined Contribution (NDC) targets have put the country on the right path for transitioning its electricity sector. To achieve those targets, the Centre needs the cooperation of the states to move faster in their clean electricity transitions.

Plant to produce bio-CNG using organic waste, tender floated in Bengaluru

24 February: Bengaluru Solid Waste Management Limited (BSWML) has floated a tender to establish a bio-methanation plant, with a capacity of 50 tonnes, to produce bio-CNG using organic waste at a cost of INR220 mn. This will be the first such plant to come up in the city. Although land is yet to be identified, the plant is likely to be set up at Yelahanka and gas will be sold in cylinders. The successful bidder, after establishing the plant, should operate and maintain it for about 15 years. BSWML said the tender was floated on Tuesday and the last date for submission of bids is 4 March. He said once the tender is awarded, the agency has to complete the work within nine months.

International: Oil

Yulong Petrochemical in preliminary oil deals with BP, Chevron

27 February: China’s Yulong Petrochemical said it had signed Memorandum of Understanding (MoU) agreements with BP and Chevron to supply its 400,000 barrel per day (bpd) greenfield refinery in northern China. Yulong Petrochemical, which is building the refinery and a 1.5 million tonnes per year ethylene complex in Shandong province, is aiming to start commercial operation of the whole complex by December 2024. The new refinery in Longkou county in Shandong province is aiming to carry out test runs late this year. The US$20 billion Yulong project will add to two large similar-sized refinery and petrochemical complexes started late last year, in China’s latest wave of refining expansion focused on petrochemical products such as plastics and chemical fibre rather than transportation fuel. The Yulong refinery will help Shandong, China’s No.3 provincial economy, scale up its fragmented refining sector, made up of some 60 small refiners, in line with Beijing’s push to close inefficient plants and build large, competitive manufacturers. The province was expected to have closed down 10 smaller refineries with combined refining capacity of more than 500,000 bpd by the end of last year to make way for the Yulong plant.

US oil drilling falls in response to lower prices

27 February: United States (US) oil drilling activity has begun to decline in response to the downturn in prices since the middle of 2022 – which will translate into slower production growth throughout the rest of 2023 and into 2024. The number of rigs drilling for oil fell to 600 in the week ending on 24 February, down from a recent peak of 627 in the week ending on 2 December, oilfield services company Baker Hughes found. When prices rise, delays reflect the time needed to confirm a change in price level is persistent rather than temporary, contract extra rigs, move them to the drill site, erect the equipment, and begin boring. When prices fall, the lag reflects time needed to confirm the trend, finish part-drilled wells, drill wells already under contract, and idle unneeded rigs. Prices are roughly 15 percent below year-ago levels and still trending lower, implying drilling is likely to continue falling through end of June 2023. The current slowdown in drilling is therefore likely to reduce production growth through the end of 2023 and probably into 2024. The Energy Information Administration (EIA) forecasts US production will be only 340,000 barrels per day (2.7 percent) higher in December 2023 than it was in December 2022.

Goldman sees oil supplies tightening, more OPEC+ supply in June

27 February: Strong pick-up in fuel demand in China and flattish supply from other producers will push the oil market into deficit in the second half of this year, leading OPEC (Organization of the Petroleum Exporting Countries) to reverse its production cut at the June meeting, analysts at Goldman Sachs said. OPEC+, comprising the OPEC and allies such as Russia, agreed in October to cut oil production targets by 2 million barrels per day (bpd) until the end of 2023. The bank said in a note that it expects oil prices to rise gradually to US$100 per barrel by December, assuming OPEC increases output by 1 million barrels per day in the second half. However, if OPEC were to stay put, then Brent would likely reach US$107 per barrel in December, and keep grinding higher thereafter, it said. Saudi Energy Minister Prince Abdulaziz bin Salman said the current OPEC+ deal on oil output would be locked in until the end of the year, adding he remained cautious on Chinese demand forecasts. Russia plans to reduce its crude oil production in March by 500,000 barrels per day (bpd), or about 5 percent of output. Goldman Sachs lowered its Brent price forecast for the second quarter to US$90 per barrel from US$105 per barrel.

Singapore companies should manage own risks in Russian oil trade

24 February: Companies in Singapore will have to consider and manage any potential impact on their business activities, transactions, and customer relationships when dealing with Russian crude oil and refined products. Russia’s oil trade faces multiple restrictions imposed by the West and Moscow in the wake of the Ukraine war. The European Union (EU) has imposed bans on Russian crude and oil products imports while the Group of Seven nations, EU and Australia agreed to ban the use of Western-supplied maritime insurance, finance and brokering for seaborne Russian oil priced above pre-set levels. In turn, Russia has banned any deals that involve applying the price cap mechanism.

International: Gas

Japan to promote gas, LNG, hydrogen investments during G7 presidency

28 February: Japan plans to emphasise the importance of investments in natural gas, liquefied natural gas (LNG) as well as cleaner fuels such as hydrogen and ammonia during the country’s presidency at the G7 summit later this year. Takeshi Soda, director, petroleum and natural gas division, Ministry of Economy, Trade and Industry (METI), said that such investments would be central to solving potential future energy shocks.

Woodside sees ‘finely balanced’ gas market, China comeback still uncertain

27 February: Woodside Energy Group CEO (Chief Executive Officer) Meg O’Neill said the global liquefied natural gas (LNG) market is “finely balanced” this year, with the market waiting to see how quickly China’s economic activity ramps up. O’Neill said while she expects Chinese economic activity to pick up as the year progresses, it is still “too early to point to any proof points”. LNG demand growth slowed last year in China, the world’s second largest LNG importer, as strict COVID-19 curbs hit economic activity and as global gas prices rocketed. While prices have dropped from last year’s record highs, they remain above historical averages. O’Neill pointed to a flat forward curve for LNG prices for this year, which is unusual for a commodity that has seasonal peaks in demand. O’Neill said the Australian government’s recent gas market regulations seeking to keep a lid on prices have hit Woodside’s ability to plan investments for the second half of the year for its Gippsland Basin asset off the southeast coast of Australia.

Kazakhstan to halt gas exports next winter

27 February: Kazakhstan plans to stop natural gas exports next winter to ensure its domestic market is fully supplied, state gas company QazaqGaz said. GazaqGaz said that stopping exports was the only way to avoid a domestic deficit. Kazakhstan, Central Asia’s biggest oil producer, exports natural gas to Russia and China. It decreased exports to 4.6 billion cubic meters (bcm) last year, from 7.2 bcm the previous year, also citing growing domestic consumption. This year Kazakhstan plans to start using natural gas instead of coal to provide power and heating for Almaty, its biggest city.

ADNOC gas business stake sale raised to 5 percent

27 February: Abu Dhabi National Oil Company (ADNOC) will increase the stake in its gas business being offered in an initial public offering to 5 percent from 4 percent, the state oil giant said. ADNOC made the decision to increase the stake in the ADNOC Gas offering “based on significant investor demand across all tranches,” it said. ADNOC also raised the tranche reserved for employees and United Arab Emirates national retirees of ADNOC Group companies residing in the country to 4 percent from 2 percent. ADNOC is selling roughly 3.84 billion shares in its gas business, equivalent to about 5 percent of its issued share capital.

China Gas Holdings signs two 20-year LNG supply deals with Venture Global

24 February: China Gas Holdings, one of China’s largest independent gas distributors, has agreed to two 20-year liquefied natural gas (LNG) supply contracts with US (United States) exporter Venture Global, adding to a flurry of deals signed between China and the US since 2021. China Gas Holdings, via its wholly owned subsidiary China Gas Hongda Energy Trading Co, would buy a total of two million tonnes per year of LNG from Venture Global under the two contracts, the company said. Supply would begin in 2027, the company said. The LNG would come from two Venture Global projects in Louisiana – Plaquemines LNG and the CP2 LNG. China Gas said it would receive 1 million tonnes of LNG annually from each project.

Greece’s Gastrade sees decision on second LNG terminal this year

23 February: Greece’s Gastrade said it expects to take a final investment decision on developing a second gas floating storage and regasification unit (FSRU) off the country’s northern port of Alexandroupolis by the end of the year. With Europe racing to cut its reliance on Russian gas in the wake of the war in Ukraine, Greece is slowly becoming a key transit route for LNG (liquefied natural gas) in southeastern Europe. Last year, Athens replaced much of Russian pipeline gas by ramping up deliveries of liquefied natural gas (LNG), mainly from the United States (US), via its sole LNG facility west of Athens. Gastrade is already developing its first LNG terminal – a ship which will be converted to a floating gas and regasification unit (FSRU) – to moor off Alexandroupolis by the end of the year. The planned new FSRU nearby, with a capacity to regasify about 10 million cubic meters of LNG annually, was estimated to cost about €500 million (US$530.85 million), Gastrade managing director Kostis Sifnaios said. The investment decision is seen coming “towards the end of 2023” once the company secures capacity booking contracts with users and financing, he said. The company is looking to cover demand from Ukraine and Moldova. Gas from that terminal could reach Ukraine through a now defunct bi-directional Trans-Balkan pipeline, which used to carry Russian gas to Romania, Bulgaria and Greece, Sifnaios said.

Trinidad to begin negotiations for gas deal with Venezuela in March

23 February: Trinidad and Tobago next month expects to formally begin negotiations with Venezuela on a promising offshore natural gas project, Energy Minister Stuart Young said. A deal would help revive the nation’s gas production, which contributes a large part of its export revenue and has been in decline. The joint venture could supply gas to Trinidad’s liquefied natural gas and petrochemical industry. Young has travelled to Caracas twice to inaugurate the negotiations since the United States (US) in January issued a license allowing the two nations to revive the Dragon gas field on the Venezuelan side of the maritime border with Trinidad. That project has been idled for over a decade. Trinidad hopes to speed up discussions on the terms of a partnership expected that would include Venezuelan state oil company PDVSA and British energy firm Shell, which produces gas in Trinidad.

International: Coal

China’s new coal plant approvals surge in 2022, highest since 2015

27 February: China approved the construction of another 106 gigawatt (GW) of coal-fired power capacity last year, four times higher than a year earlier and the highest since 2015, driven by energy security considerations, research showed. Over the year, 50 GW of coal power capacity went into construction across the country, up by more than half compared to the previous year, the Centre for Research on Energy and Clean Air (CREA) and Global Energy Monitor (GEM) said. The amount of new capacity connected to the grid had slowed in recent years after a decline in new approvals over the 2017-2020 period, but it is set to rebound over the next few years, driven by concerns about power shortages. China suffered a wave of blackouts in September 2021 as a result of coal supply shortages, cutting off thousands of homes and factories. A long drought last year also saw a dramatic drop in hydropower generation and the rationing of electricity.

Indonesia launches carbon trading mechanism for coal power plants

22 February: Indonesia launched the first phase of mandatory carbon trading for coal power plants, part of efforts by Southeast Asia’s biggest economy to boost renewable energy and achieve net zero emissions by 2060. Coal makes up more than half of Indonesia’s power generation. The first stage of a carbon trading mechanism will cover 99 power plants with total installed capacity of 33.6 gigawatt (GW) directly connected to power grids owned by state utility Perusahaan Listrik Negara (PLN). Under the mechanism, power plants that emitted more carbon than their quota can buy carbon credits from plants with below-quota emissions or from renewable power plants. Indonesia’s carbon trade applies to power plants with a capacity of at least 100 MW. Energy Minister Arifin Tasrif said, however, it would later be rolled out to smaller coal plants and other fossil-fueled power plants, as well as power plants not connected to PLN’s grid. Indonesia initially planned to tax the remaining carbon emissions that had not been offset by carbon credits, but the implementation has been delayed.

International: Power

Europe gets ready to revamp its electricity market

27 February: European Union (EU) energy ministers meet to debate upcoming power market reforms. Brussels is set to propose the revamp next month, but already countries are split over how to “fix” the energy system – or whether it needs fixing at all. The European Commission pledged last year to reform the EU’s electricity market rules, after record-high gas prices – caused by cuts to Russian gas flows – sent power prices soaring for European companies and citizens. The aim is to reform the electricity market to shield consumer energy bills from short-term swings in fossil fuel prices, and make sure that Europe’s growing share of low-cost renewable electricity translates into lower prices. Currently, power prices in Europe are set by the running cost of the plant that supplies the final chunk of power needed to meet overall demand. Often, that is a gas plant, so gas price spikes can send electricity prices soaring. In a document shared with EU countries, Spain said the reforms should help national regulators to sign more long-term contracts with electricity generators to pay a fixed price for their power.

International: Non-Fossil Fuels/ Climate Change Trends

Italy’s De Nora bets on solar panels to boost its green ambitions

27 February: Industrie De Nora aims to reach 8 Gigawatts hours (GWh) of electricity generated from renewable sources each year by the end of 2025 by installing solar panels at all of its 12 production sites, the Italian electrode maker said. All of De Nora’s plants were studying the feasibility of initiatives aimed at generating electricity from renewable, the company said. De Nora said it would reach an overall 3.3 GWh already by the end of 2023 thanks to a photovoltaic park at its production site in Germany, which will bring 1.3 GWh annually alone – as well as the involvement of its two Italian plants of Milan and Cologno and Brazil’s Sorocaba site.

Kenya to set up 136 solar mini-grids for remote communities

27 February: Kenya is constructing 136 solar powered mini-grids in far-flung areas not properly served by the national electricity grid, Energy Minister Davis Chirchir said. Off-grid solar power, spearheaded by start-ups, has gained popularity in Africa in recent years for homes left off mainstream electricity grids. The new solar mini-grids are part of a US$150 million programme funded by the World Bank. Powered by solar panels, the grids use batteries and backup generators to provide electricity independent of the main national grids. Although Kenya generates a large chunk of its electricity from renewable sources such as hydropower and geothermal, it runs dozens of diesel-powered generation units following years of drought.

New French fund with US$92.6 mn targets African solar development

24 February: A new investment fund with €87.5 million (US$92.63 million) will finance solar power production across Africa, with a focus on West and Central Africa, French fund manager RGREEN INVEST and investment adviser ECHOSYS INVEST said. The AFRIGREEEN Debt Impact Fund’s first closing will finance on- and off-grid solar power plants for small- and medium-sized commercial and industrial consumers across the continent. The project aims to provide direct lending and asset-based debt facilities for regional and international developers and African commercial and industrial companies to develop solar infrastructure. The groups are looking to have a portfolio of twenty to thirty investments, with aim of meeting long-term debt financing needs of between €10 million and €15 million, with an average of around €5 million over eight to ten years.

US 2022 power plant emissions fell on switch from coal to gas: EPA

24 February: United States (US) power plant emissions of pollutants that harm human health and warm the planet fell last year as the industry continued a switch from coal to natural gas, the Environmental Protection Agency (EPA) said. The reductions occurred, despite a 2 percent rise last year in electricity demand in the lower 48 US states, mostly due to the transition off coal, the fossil fuel that releases large amounts of pollution when burned. The EPA said emissions of smog components nitrogen oxide and sulfur dioxide last year dropped 4 percent and 10 percent, respectively, compared with 2021. Emissions of mercury, a neurotoxin which can accumulate in the environment and make some kinds of fish unsafe to eat frequently, fell 3 percent. Emissions from power plants of the main greenhouse gas carbon dioxide, fell 1 percent compared with 2021, the EPA said. The EPA data did not mention emissions of the powerful greenhouse gas methane from the natural gas industry, an emissions source that environmentalists say is important to decrease as the US is on track to become the world’s largest exporter of liquefied natural gas.

EU manufacturers eye offshore wind turbine plants in Vietnam

23 February: European manufacturers are considering investing hundreds of millions of dollars in Vietnam to build wind turbines plants, as the country gears up to exploit its large untapped potential in offshore wind. The Southeast Asian country is seen as a potential major player in the sector because of its strong winds in shallow waters near coastal, densely populated areas, according to the World Bank Group. The companies were looking for sites near ports but talks with local authorities and industrial parks were still preliminary, as investors were waiting for the country to approve clear rules on offshore wind farms. The government has set ambitious targets in draft plans for the offshore wind sector but has struggled for years to approve them, with more delays seen as likely, and no offshore wind projects currently in operation.

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 2022 is the nineteenth 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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