MonitorsPublished on Feb 17, 2022
Energy News Monitor | Volume XVIII, Issue 32
Economic Survey 2021-22: Directions for energy


According to the preface to the Economic Survey 2021-22, its central theme is the “agile” approach that relies on real-time monitoring of actual outcomes, feed-back loops, and flexible responses. This contrasts with the traditional “waterfall” approach that depended on analysis, planning, and implementation. Though the 2021-22 survey says that planning mattered in the “agile” approach, “it is mostly used for scenario analysis, identifying vulnerable sections, and understanding policy options”. The use of real-time data is critical in the “agile” approach and in this context, energy-related indicators such as electricity production and mobility data are amongst the many real-time indicators that the survey presents. Though there is no separate section on energy in the survey, there is a section on energy transition and climate change that covers newer forms of clean energy while the discussion on traditional forms of energy is relegated to the section on industry and infrastructure.

Traditional Energy Sources

The survey does not reveal a clear future for traditional energy sources mainly fossil fuels. It reiterates information and data that are familiar to those who follow the energy industry. As one of the eight core industries that constitute over 40 percent of the index of industrial production (IIP), coal is amongst sectors that have IIPs higher than pre-COVID lockdown levels. The survey observes that coal is “the most important and abundant” fossil fuel in India and that demand for coal will remain in the range of 1.3-1.5 billion tonnes (BT) by 2030, quoting the draft national energy policy of the Niti Aayog. The demand for coal in 2019-20 was over 979 million tonnes (MT). Between 2011-12 and 2019-20, demand for coal grew by over 5 percent. Projection of a demand of 1.3-1.5 BT by 2030 implies that growth will be slower at 2.6-3.9 percent annually. The survey credits the state-owned coal producers for bringing 56,000 hectares (Ha) of land under green cover creating a carbon sink of 500,000 tonnes of carbon-di-oxide (CO2) each year and for investing in over 1496 MW (megawatts) of renewable energy (RE) capacity. State-owned coal companies are expected to bring an additional 30,000 Ha of land under green cover by planting 75 million trees by 2030 and possibly also invest in over 5560 MW of RE capacity. The survey is optimistic that opening of coal mining to the private sector will bring efficiency and competition in coal production, attract investment, and create more jobs in the coal sector. This observation runs counter to the predominant narrative of phasing down coal production and employment in coal mining paving the way for a just transition away from coal.

In the context of petroleum, the survey rightly observes that high international crude oil prices and high taxes on petroleum products contributed significantly to inflation. But the rest of the discussion on the petroleum sector is devoted mostly to the celebration of schemes such as “Ujjwala Yojana” rather than to critical issues such as the impact of high oil prices on the Indian economy. Ujjwala Yojana offered free or subsidised liquid petroleum gas (LPG) connections to poor households mostly in poll bound Northern states. As poor households are not able to sustain use of LPG by purchasing unsubsidised refills has meant that ujjwala yojana is more effective as a means to influence electoral outcomes rather than transform energy outcomes. The survey reiterates the widely reported claim that LPG coverage is 99.8 percent. The source of this information is the PPAC (petroleum planning and analysis cell) that acknowledges that the methodology used for calculating LPG coverage is under review. The methodology only involves estimating the number of current households by extrapolating the number of households, according to Census 2011. Adjusting the extrapolated number of households to the number of domestic connections can give the desired LPG coverage. Going by the data in the survey, only 0.2 percent of households (or just over 65,000 assuming that the number of households is about 33 million) do not have access to LPG. If so, the release of an additional 10 million LPG connections under Ujjwala 2.0 would mean multiple LPG connections in many households. The survey observes that there is no subsidy for domestic connections since 2020 but confusingly qualifies the statement with “in the Delhi market” in the parenthesis. The survey highlights the opening of up to 100 percent foreign direct investment in the petroleum and natural gas sector in July 2021 suggesting the possibility of divestments in the sector.  In the natural gas segment, the survey states that consistent progress in increasing the reach of the national gas grid could potentially assist in achieving uniform economic and social progress.

The coal stock crisis that reduced power generation resulting in blackouts in many parts of the country in late 2021 does not merit a discussion in the survey. There is little that is new in the details of capacity addition in the power sector based on traditional fuels such as coal and RE that the survey presents.

Renewable Energy Sources

The discussion on RE is dominated by reiteration of targets set for RE by the government and achievement so far. The survey highlights how RE companies have used the liberalised external commercial borrowings (ECB) norms of the RBI (reserve bank of India) to raise finance through green bonds. RBI is a member of the task force on climate-related financial risks set up by the Basel committee on banking supervision. It is also a member if the international platform on sustainable finance, a forum of public authorities from 17 countries that is working on environmental, social, and governance (ESG) disclosures and a sustainable finance taxonomy. This will ease access to low-cost finance.

In a box item on transitioning to clean energy, the survey comments that the pace at which the shift from conventional fossil-fuel-based sources is made will determine the extent and mix of investment in RE sources. The survey cautions that India should avoid the risk of being a latecomer to implementation of net zero emission plans as the price of critical minerals required for the energy transition is likely to increase substantially in the future. Citing the surge in the price of natural gas in Europe, the survey notes the importance of having a diversified mix of energy sources and states categorically that fossil fuels will remain an important part of this mix.

The preface to the economic survey 2021-22 raised expectations over the “agile” approach, especially the use of scenario analysis. But the survey does not meet expectations and offers few clues on the direction the energy sector should take.

Source: Economic Survey 2021-22

Monthly News Commentary: NON-FOSSIL FUELS

Solar Sector Expects Post COVID Boom


RE Policy and Market Trends

After witnessing cloudy skies this year, the country’s renewable energy sector is expected to boom with a likely investment of over US$15 billion in 2022 as the government focuses on electric vehicles, green hydrogen, manufacturing of solar equipment as well as achieving the ambitious 175 gigawatt (GW) renewable capacity target. India, which has an installed renewable energy generation capacity of a little over 150 GW, aims to reach 175 GW in 2022. Out of the total mix, 100 GW would be from solar, 60 GW from wind, 10 GW from bio-power and 5 GW from small hydro power projects. During the 2014-2019 period, renewable energy programmes and projects in India attracted investments of US$64.4 billion (bn), as per REN21 Renewables 2020 Global Status Report. India aims to have 500 GW of installed renewable energy (RE) capacity by 2030.

National Institute of Technology (NIT)-Andhra Pradesh (AP) is establishing a Common Research and Technology Development Hub (CRTDH) in renewable energy. Sponsored by the department of scientific and industrial research, this Hub will help local micro and small enterprises develop technological solutions for off-grid and on-grid renewable energy systems. The Hub would also nurture start-ups. According to NIT-AP, the infrastructure and equipment at this research centre would facilitate micro and small enterprises to conduct research and development activities, including testing of innovative products and new technologies.

According to Mercom India Research, the solar energy generation capacity addition rose 335 percent to 7.4 GW in the January-September period this year from 1.73 GW a year ago. According to the Mercom India, India added 2,835 megawatts (MW) of solar in the third quarter (Q3 July-September) of the calendar year (CY) 2021, up 14 percent compared to 2,488 MW installed in Q2 2021 (April-June). Year-over-year (YoY) installations in Q3 surged 547 percent. As per the Mercom India, increased raw materials costs, severe volatility in module availability and price, curtailment of power in several states, and high freight charges have added to the difficulties for the developers. Mecom India is of the view that module prices have been increasing for six consecutive quarters, a trend not seen in the past ten years. Tender announcements as of September increased 16 percent and auction activity surged 181 percent year-on-year. As of September, the top 10 states accounted for about 96 percent of the country’s cumulative large-scale solar installations. Rajasthan has been the top solar installer for three consecutive quarters by contributing about 63 percent of the total large-scale solar installations in the country this quarter, followed by Gujarat with 19 percent. Solar dominated capacity additions accounted for close to 60 percent, followed by thermal power, which contributed 21 percent.

Solar Manufacturing

Indian Institute of Technology, IIT Guwahati researchers, have developed a cost-effective perovskite solar cell to produce electricity from sunlight. The perovskite-based semiconducting devices are considered the most promising due to their low-cost, ease of manufacturing as roll-to-roll devices, high material availability and easy recyclability. The devices developed can achieve power conversion efficiency as much as 21 percent. Currently, inorganic solar cell (Silicon-based) is a significant player in the market. However, this technology requires high-temperature processing, resulting in the high price of solar panels. Further, the recycling of solar panels is hazardous and complicated.

Roof Top /Distributed Solar Projects

Pondicherry University saves more than INR10 mn per annum on electricity bills after the commissioning of solar power plants with a total capacity of 2.4MW at a cost of INR130 mn (US$1.74 mn). Renewable Energy Service Company (Resco), an energy service company which provides energy to consumers from renewable energy sources, has developed, installed and financed the plant. The company operates and owns the rooftop solar power project and supplies power generated from the project to the university. Resco has installed rooftop solar plants in 15 buildings and car porches in two areas in various locations on the campus. The university roughly spends INR75 lakh (US$0.101 mn) per month on electricity.

BTL EPC, the engineering division of Kolkata-based Shrachi Group, is looking to diversify into renewable energy sector, particularly solar EPC (engineering, procurement and construction). The company, which has just executed the engineering and installation of a small solar power plant at Panagarh, is planning to get into tie up with NTPC, state governments and private companies for solar projects.

Utility Scale Solar Projects

ITC has commissioned its first offsite solar plant in Dindigul, Tamil Nadu. The 14.9 MW solar plant, built at an investment of INR760 (US$10.2) million (mn), will help reduce CO2 (carbon dioxide) emissions over the course of its lifetime. The plant has already helped ITC to achieve the rare feat of meeting 90 percent of its electricity requirement from renewable sources in Tamil Nadu. This new project is in line with ITC’s ‘Sustainability 2.0’ Vision, a comprehensive goal-based agenda which raises the bar for sustainability performance. It calls for inclusive strategies that can support even more livelihoods, pursue newer pathways to fight climate change, support circular economy and enable transition to a net zero ecosystem. As a part of this Vision, ITC plans to meet 100 percent of the entire grid electricity requirements from renewable sources by 2030 and contribute meaningfully to combat the threat of climate change. ITC’s renewable portfolio comprises 138 MW of wind power plants and 14 MW of solar plants with 53 MW of additional solar capacity under execution. Currently, projects are also underway in other sources of renewable energy like biomass boilers. The Company has made investments of over INR10 bn (US$134.2 mn) in renewable energy assets to date.

Hydro Power

According to the State-owned power producer SJVN, it will invest INR600 bn (US$8.05 bn) to harness 5,097 megawatts (MW) of hydropower in Arunachal Pradesh. SJVN has set an ambitious target to achieve an installed capacity of 5,000 MW by 2023, 12,000 MW by 2030 and 25,000 MW by 2040. The firm had urged the Uttar Pradesh government to allot the company more renewable power projects in the state.

Prime Minister (PM) of India inaugurated and laid the foundation stone of hydropower projects worth INR110 bn (US$1.48 bn) in Mandi, Himachal Pradesh that will help boost the state’s economy and provide additional power to the states. One project that has been lying pending for around three decades will prove to be beneficial for Delhi, which will be able to receive around 500 million cubic metre water supply per year. The PM has constantly focussed on fully utilising the untapped potential of the resources available in the country and one of the steps in this regard has been to utilise optimally the hydropower potential in the Himalayan region. The PM laid the foundation stone of the Luhri Stage 1 Hydro Power Project. The 210 MW project will be built at a cost of over INR18 bn (US$241 mn). It will lead to generation of over 750 million units of electricity per year. The PM also laid the foundation stone of Dhaulasidh Hydro Power Project. This will be the first hydropower project of Hamirpur district. The 66 MW project will be built at a cost of over INR6.8 bn (US$ 91.2 mn).


Gujarat Alkalies and Chemicals Limited (GACL) and GAIL (India) Limited signed a Memorandum of Understanding (MoU) for setting up a bioethanol plant with a production capacity of 500 kilo litre per day (KLD) in Gujarat. Apart from the plant, both the companies also agreed to cooperate in other areas of mutual interest. The MoU was signed in the presence of Chief Minister of Gujarat. The proposed plant will use corn/broken rice as feedstock with eco-friendly technology and it will produce 500 KLD bioethanol, which will be utilised for blending in petrol. With Dahod, Panchmahal, Aravalli and Mahisagar being the major corn-producing districts in Gujarat, the bioethanol plant is likely to come up in one of these districts. A detailed feasibility study through a third party is in progress for the project.

Nuclear Power

Noting that net zero targets are expected to be met through a combination of clean energy sources, including nuclear power, the government said that in this context, India’s present nuclear power capacity of 6,780 MW is planned to be increased to 22,480 MW by 2031. According to the  Department of Atomic Energy,  the present installed nuclear power capacity in the country is 6,780 MW and the share of nuclear power in the total electricity generation in the country is about 3.1 percent in the year 2020-21. The government has accorded administrative approval and financial sanction for 10 indigenous Pressurised Heavy Water Reactors (PHWRs) with an aggregate capacity of 7,000 MW to be set up in fleet mode.

Construction of Unit 6 of the Kudankulam Nuclear Power Plant (KKNPP) in Tamil Nadu has been formally launched by pouring the first concrete in the foundation slab of the reactor building, according to Rosatam State Corporation of Russia. The first two power units demonstrated sustainable operation at the nominal power level, while the power units of the second stage were being constructed, that is, work is under way at Unit 3 to prepare for installation of the reactor pressure vessel. According to Rosatam, the equipment for the top-priority installation at Units 5 and 6 was being supplied and the construction process was being supported by working documentation. As part of India-Russia nuclear cooperation, Rosatom is scheduled to construct six units of VVER-1000, light-water reactors at Kudankulam. In December 2014, both sides announced a decision for the construction of at least 12 more units in India. JSC ASE is the general designer and supplier of equipment from the Russian side. The General Framework Agreement for construction of KKNPP Units 3 and 4 was signed on April 10, 2014, following which negotiations began between India and Russia for construction of Units 5 and 6, and an agreement was reached for these units to be built in the same design as those of the second stage. Russia is building the KKNPP under an Inter-Governmental Agreement of 1988 and follow-on agreements in 1998 and 2008. Unit-1 joined the grid in October 2013 and Unit-2 was connected to the grid in August 2016.

Rest of the World

S America

Brazil’s state-run oil company Petrobras will start testing new renewable diesel based on co-processed edible oils with customers in January, while awaiting regulatory approval to sell it commercially. The tests are expected to take about six months and will be backed by a fuel distributor and a bus fleet owner, whose names are yet to be revealed. The oil giant had successfully tested the renewable diesel production system at its Repar refinery in mid-2020, but it sees the new testing phase as important in confirming its effectiveness. Repar is currently capable of producing 114,000 tonnes per year of renewable fuel based on co-processed soybean oil. The move is part of Petrobras’ plan to insert renewable fuels based on new technologies into Brazil’s market. The investments include adapting the Paulinia and Cubatao refineries so that both could produce a total of 505,000 tonnes of renewable fuel per year. Most of the money, however, would go toward building a 100 percent renewable biorefinery capable of producing 500,000 to 800,000 tonnes per year, which is expected to start operating in 2027 in a location yet to be determined, the company said.

Asia Pacific

Japan’s industry and land ministries have selected three consortiums, all led by Mitsubishi Corp, as the operators for three offshore wind power projects in Akita, northern Japan, and Chiba, near Tokyo. The announcement is the second set of results of government auctions for offshore blocks under a new law to promote wind power as Japan aims to boost renewable power capacity to help achieve its 2050 goal of becoming carbon neutral. The winner of the 391 MW wind farm off the coast of Choshi in Chiba is a consortium of Mitsubishi Corp Energy Solutions, Mitsubishi Corp and C-Tech Corp, a subsidiary of Chubu Electric Power Co Inc. Another consortium of the same three companies also won the 479 MW project off the coast of Noshiro, Mitane and Oga in Akita. A third consortium of the same three companies and Venti Japan Inc, Akita-based renewable energy firm, was selected for the 819 MW project off the coast of Yurihonjyo in Akita. The three projects are scheduled to start operation between September 2028 and December 2030.

TotalEnergies will register, verify and trade renewable energy certificates (RECs) generated by its solar assets on a trading platform owned by Asian exchange The move is expected to generate additional revenue for Renewables Distributed Generation for Asia (TRDG), wholly owned by TotalEnergies to develop solar assets across Asia. will verify and register renewable energy generated by TotalEnergies’ solar power plants as RECs on global registry APX TIGR. The certificates will then be traded on the’s platform and sold to companies seeking to offset carbon emissions from operations powered by fossil fuels.


The German government has said that it considers nuclear energy dangerous and objects to European Union (EU) proposals that would let the technology remain part of the bloc’s plans for a climate-friendly future. Germany is on course to switch off its remaining three nuclear power plants at the end of this year and phase out coal by 2030, whereas its neighbour France aims to modernise existing reactors and build new ones to meet its future energy needs. Environmentalists have criticised Germany’s emphasis on natural gas, which is less polluting than coal but still produces carbon dioxide – the main greenhouse gas – when it is burned.

Fortum and German subsidiary Uniper unveiled plans to build two wind farms in Finland with a combined capacity of 380 megawatts (MW), marking the first project under their joint renewables strategy in Europe. The total investment for the two parks stands at about €360 mn (US$407 mn), of which 216 mn, or 60 percent, will be borne by Fortum, which will hold the same share in the projects, with Finnish energy firm Helen Ltd owning the rest. Construction of the onshore parks, to be located in Naerpes, is planned to start in January, and they are expected to be fully operational in the second quarter of 2024 at the latest. Fortum and Uniper a year ago unveiled plans to develop up to 2 GW of onshore and solar capacity by 2025 as part of a new carbon neutral strategy.

Turkey has ranked 12th in the world and 5th in Europe in terms of renewable energy-based installed power. Turkey left 24 European countries behind in the list with its renewable energy installed capacity that was put into use in 2020 alone. Turkey is benefitting from the investments made in domestic and renewable energy resources to minimize its dependence on foreign energy. As a result of the revolutionary national energy and mining policy launched in 2017, some 74.2 percent of overall 24,718 MW installed power comes from renewable energy-based power plants. To date, Turkey’s renewable energy installed power constitutes 53 percent (52,930 MW) of its total installed power, which is planned to exceed 100,000 MW by the end of 2021.  It was reported that the amount of electricity produced from renewable energy alone in 2020 exceeded the total electricity generation in 2002. Turkey has increased the amount of renewable energy approximately 3.7 times in the past two decades. Approximately 52 percent of the 275.7-billion-kWh electricity produced in the first ten months of 2021 came from domestic and renewable energy sources.

Russia & Central Asia

The Ministry of Finance of Israel has awarded 814 MW of solar projects in a tender for innovative non-ground mounted PV (photovoltaic) projects, including agrivoltaics, vertical installations, solar carports, PV arrays for motorways, and solar shades, with an average final price of ILS 0.1705/kWh (US$5.41c/kWh). The Israeli solar developer Prime Energy secured around 475 MW of the allocated capacity, followed by Doral Energy (100 MW), Zabar Solar (65 MW), YVS Renewable Energy (50 MW), Enlight Energy (30 MW) and EDF Renewables (32 MW). In October 2020, the government approved a plan to add 15 GW of solar power capacity to raise the share of renewable power generation from 17 percent to 30 percent in 2030. Solar currently accounts for 7 percent of the country’s installed capacity, with 1.4 GW (end of 2020). Earlier in December 2021, Shikun & Binui was selected to build and operate a 300 MW solar project in Dimona, including a 210 MWh energy storage component; the tender for the project had a final price of ILS8.58c/kWh (US$2.7c/kWh).

News Highlights: 5 – 11 January 2022

National: Oil

India’s fuel consumption shows almost no growth in December

11 January: India’s fuel consumption showed flattish growth in December 2021 ahead of fresh restrictions kicking in to control the surge of a new variant of coronavirus that is likely to further dampen demand. Total petroleum product consumption in December 2021 stood at 18.43 million tonnes (mt), compared with 18.36 mt in the same month last year. This after a rise in demand for transport fuel was negated by a fall in industrial fuel. The consumption was 7.6 percent higher month-on-month but was still 2.7 percent lower than pre-COVID-19 levels of 2019, according to the data released by the oil ministry’s Petroleum Planning and Analysis Cell (PPAC). As the economy continued to rebound from the deep impact of the second wave, transport fuel demand rose in December. Diesel, the most used fuel in the country accounting for almost 40 percent of all petroleum product consumption, rose 1.5 percent year-on-year to 7.305 mt and was near pre-COVID-19 demand of 7.387 mt in December 2019.

Gujarat government cuts VAT on jet fuel by 20 percent

5 January: The Gujarat government announced a 20 percent reduction in value-added tax (VAT) on aviation turbine fuel (ATF) to bring the levy at 5 percent in a move to boost tourism in the state. The decision to reduce VAT on jet fuel was taken by Chief Minister Bhupendra Patel at a meeting. The step was taken to boost tourism in the state, it said. VAT on jet fuel was reduced by 5 percent by the Gujarat government on 13 December.

National: Gas

Gas network to undergo maintenance

5 January: The Compressed Natural Gas (CNG) and Piped Natural Gas (PNG) supply network in Pune region would undergo maintenance from 6 to 11 January, prompting concerns amongst customers over low pressure and supply disruption. The Maharashtra Natural Gas Limited (MNGL) said as a part of the proactive measure and compliance with safety and statutory requirements, an internal inspection of gas network and periodic maintenance would be carried out. All possible precautionary measures were being taken by GAIL (India) Ltd to ensure uninterrupted supply of natural gas to customers. Though the precautionary measures would be in place, there can be a pressure drop in the pipeline network during the maintenance period, which can affect continuous CNG/PNG supplies at few CNG stations and/or to industrial customers.

National: Coal

MCL offers 2.25 mn tonne coal to power consumers via road-cum-rail mode

11 January: Coal India Ltd (CIL) arm Mahanadi Coalfields Ltd (MCL) said it has offered 22.5 lakh tonnes of coal to power consumers via the road-cum-rail mode as the stock of fossil fuel rises above 12.5 million tonnes (mt) at the mines with a gradual increase in output in the last quarter of FY22. MCL is looking for opportunities to maximise despatch as the company’s coal stock is slated to increase further with an increase in production from its mines in Odisha. The offer of 22.5 lakh tonne coal through the road-cum-rail (RCR) mode to consumers was made after this new initiative. A coal allocation of 18 lakh tonnes to state/ central power generation companies in November and December last year successfully helped MCL liquidate stocks. MCL had 12.2 mt of coal stock at its mines as on 1 January. The same is increasing with the gradual increase in coal production. MCL has a coal production target of 163 million tonnes for the ongoing financial year.

Coal India’s April-December capex up 37 percent at ₹107 bn

5 January: Coal India Limited (CIL) said that its capex spend during the April-December period of current fiscal was INR107.17 bn a growth of ₹37.4 percent on year-on-year basis. The company’s capex during the corresponding period of last year was INR78.01 bn, according CIL. Also its capex spend during the referred period marks 86.3 percent of the progressive target achievement. CIL is focusing on increasing its evacuation capacity through rail mode by an additional 330 million tonnes per annum by 2023-24 through strengthening of its rail infrastructure. Mainly deployed in opencast mines, the major source of the company’s coal production, these machines would help in removal of overburden and ramp up the coal output.

National: Power

UP CM slashes tube well electricity rates by half to woo farmers

7 January: In what appears to be a step taken to tackle the Samajwadi Party’s promise of providing 300 units of free electricity to domestic households and irrigation, the BJP government announced a 50 percent rebate in electricity rates for farmers and urban users who own private tube wells. The decision would benefit 13 lakh consumers, the State government said. The electricity rates would be halved for metered, unmetered and energy-efficient pumps in rural areas and metered tube wells in urban areas, the BJP government said. With the 2022 Assembly election due to be announced anytime soon, Chief Minister Yogi Adityanath’s decision comes on the heels of his opponent Akhilesh Yadav recently declaring that if the Samajwadi Party is voted to power, it would not only provide 300 units of free electricity to domestic households but also free electricity for irrigation. The decision to cut the electricity rates for tube well users would bring an estimated additional burden of INR10 bn per year on the Uttar Pradesh Power Corporation Limited (UPPCL). The government would issue grants to the UPPCL for this financial burden. As per the decision, in rural areas the metered connection rate would fall from INR2 per unit to INR1 while the fixed charge would drop from INR70 to INR35. For unmetered connections, the fixed charge would be reduced to INR85 from INR170.

Odisha government invests in power infrastructure to provide 24×7 power supply

7 January: Odisha Chief Minister Naveen Patnaik said the state government is investing significantly in improving power infrastructure to provide 24×7 quality power to all. He said that electricity being the prime mover of the economy, the state government has given utmost thrust to building quality power infrastructure. The government’s advance planning has brought the state from a power deficit to a surplus situation, he said.

National: Non-Fossil Fuels/ Climate Change Trends

India to add 16 GW of renewable energy capacity in FY23: ICRA

11 January: India is likely to add an estimated 16 GW of renewable energy over FY23, rating agency ICRA said. The country has a strong pipeline of 55 GW clean energy projects. ICRA noted that the outlook for capacity addition “remains strong” due to a large project pipeline and “highly competitive tariffs offered by these projects”. Compared to 12.5 GW expected in FY22 and 7.4 GW in FY21, it expects 16 GW capacity addition in FY23. It feels commitments made at the recent COP26 summit such as increasing non-fossil fuel power capacity to 500 GW and meeting 50 percent energy requirement through renewables by 2030, strengthen prospects for the renewable energy sector. It also noted that capacity addition made “strong recovery” between April-November 2021 (FY22) – adding 8.2 GW compared to 3.4 GW during the same period in the preceding year.

Haryana is leading state in solar pumps installation: CM

6 January: Chief Minister (CM) Manohar Lal Khattar said Haryana is a leading state in the installation of solar water pumps to promote micro-irrigation under the Pradhan Mantri Kisan Urja Suraksha Utthaan Mahabhiyan (PM-KUSUM). The government is giving a 75 percent subsidy on the purchase of these pumps. The farmers apprised the CM that they had to spend only 25 percent of the amount as the remaining amount has been provided by the government for installing the solar pumps. He directed the deputy commissioners to launch a special campaign to promote micro-irrigation and further to ensure that water reaches every field under the state government’s ‘Har Khet Ko Pani’ scheme. He said that seven years ago, not much had been done in the field of solar energy in the state. Till the year 2014, only 492 solar pumps had been installed in the state. Taking serious note of this, the current state government prepared a road map for the promotion of solar energy, he said. He said that 25,897 solar pump sets have been installed in the past seven years and this year, the work of installing 13,800 pump sets is in progress. The priority of the current government is to promote green energy, he said.

International: Oil

Iraq to boost southern oil export capacity from second quarter

11 January: Iraq will be able to boost exports by as much as 250,000 barrels per day (bpd) from the second quarter after finishing the installation of pumping stations at its Gulf ports. Iraq’s State Oil Marketing Organisation (SOMO) had exported as much as 3.7 million bpd from its southern ports in Basra, but the need to rehabilitate aging export infrastructure forced Iraq to reduce southern exports when upgrade work began from May 2020. The pandemic-driven slump in oil prices and tight Iraqi regulations resulted in delays to the projects, which were run by Basra Oil Co (BOC). Work to install new pumping stations to boost export capacity from Basra took place for most of 2021, the Iraqi oil ministry said. BOC also expects to complete maintenance operations to restore crude loading operations at the Khor al-Amaya port by the end of 2022, with an initial capacity of 400,000 bpd.

CNOOC’s Bohai overtakes Daqing as China’s largest oil field

10 January: China’s offshore oilfield cluster Bohai, run by CNOOC Ltd, has become the country’s largest crude oil producer with output hitting 30.132 million tonnes (602,640 barrels per day) in 2021. Bohai field, off north China, overtook the country’s flagship onshore producer Daqing, in northeast China, which pumped 30 million tonnes last year. CNOOC Ltd, the listed vehicle of China National Offshore Oil Company, produced 48.64 million tonnes of crude oil last year, up by 3.23 million tonnes, which accounted for up 80 percent of the national increment in crude oil production. Developed in 1965, the Bohai cluster fields are considered marginal assets with relatively high development cost and poor crude oil quality. But CNOOC has in the past two decades sharpened its exploration and development know-how, such as shortening the average drilling time to under 10 days from 57 days, and has made several major discoveries like Kenli 10-2 and Bozhong 19-6 fields. China, the world’s second-largest oil consumer which imports three quarters its oil needs, eked out a 2.5 percent increase in domestic crude output in the first 11 months of 2021 over a year earlier.

Oil slips, but gains 5 percent in the week on Kazakh, Libyan concerns

7 January: Oil prices settled lower, as the market weighed supply concerns from the unrest in Kazakhstan and outages in Libya against a US (United States) jobs report that missed expectations and its potential impact on Federal Reserve policy. Brent crude settled down 24 cents, or 0.3 percent, to US$81.75 a barrel, while US West Texas Intermediate (WTI) crude was down 56 cents, or 0.7 percent, at US$78.90 a barrel. Brent gained 5.2 percent, while WTI gained 5 percent in the first week of the year, with prices at their highest since late November, spurred on by the supply concerns. Production at Kazakhstan’s top oilfield Tengiz was reduced, its operator Chevron Corp said, as some contractors disrupted train lines in support of protests taking place across the central Asian country. Production in Libya has dropped to 729,000 barrels per day (bpd) from a high of 1.3 million bpd last year, partly due to pipeline maintenance work. A barrel of oil for delivery in March was selling at a discount of as much as 70 cents to a barrel for delivery in February, the highest since November.

OPEC oil output boost in December again undershoots target

6 January: The increase in OPEC (Organization of the Petroleum Exporting Countries)’s oil output in December has again undershot the rise planned under a deal with allies, a survey found, highlighting capacity constraints that are limiting supply as global demand recovers from the pandemic. The OPEC pumped 27.80 million barrels per day (bpd) in December, the survey found, up 70,000 bpd from the previous month but short of the 253,000 bpd increase allowed under the supply deal. OPEC and its allies, a group known as OPEC+, are gradually relaxing 2020’s output cuts as demand recovers from 2020’s collapse. But many smaller producers can’t raise supply and others have been wary of pumping too much in case of renewed COVID-19 setbacks. The OPEC+ agreement allowed for a 400,000 bpd production increase in December from all members, of which about 253,000 bpd is shared by the 10 OPEC members participating in the deal, OPEC figures show. With output undershooting the planned increase, OPEC’s compliance with its pledged cuts increased to 127 percent in December, the survey found, from 120 percent a month earlier. OPEC+ met and agreed to proceed with another 400,000 bpd output increase in February, suggesting the lag between actual and pledged supply could widen further without larger producers compensating for shortfalls.

Exxon makes two new oil discoveries off Guyana coast

5 January: ExxonMobil Corp, the largest US (United States) oil producer, said it had made two new discoveries in the Stabroek Block off Guyana’s coast, one of its top bets for production growth this decade. Guyana has been the scene of the world’s biggest offshore discoveries in years, with 10 billion barrels of recoverable oil and gas confirmed since it began production in 2019. An Exxon-led consortium is responsible for all output in the South American country.

International: Gas

Gas gap in Europe drives US LNG exports to record high

6 January: Sky-high European demand drove US (United States) liquefied natural gas (LNG) exports to a record in December, Refinitiv data showed, with winter supply worries set to sustain orders for the fuel. About half of the record US LNG volumes shipped last month went to Europe, up from 37 percent earlier in 2021, data from Refinitiv and the US Energy Information Administration showed. The gains reflected soaring demand for the home heating and industrial fuel that pushed prices in Europe and Asia to record highs. The United States has ample and cheap supplies as its shale oil and gas boom in the last two decades led to domestic production that has exceeded US demand by about 10 percent. Vessel tracking data showed about 7.15 million tonnes (mt) of LNG were shipped last month on 106 vessels, up 16 percent compared to 6.14 mt on 89 vessels the same month a year ago. That topped the previous record of 6.51 mt set in May. Dutch gas prices, the European benchmark, have cooled since late December removing their premium to Asia. The Japan Korea Marker (JKM) price for Asia spot gas was US$34.19 per million metric British thermal units, a premium of about US$4 to Europe.

Europe’s Enel liquidity not affected by gas volatility

5 January: Europe’s biggest utility Enel has most of its gas needs covered by long-term contracts and price volatility has not affected its liquidity position, the company said. German utility Uniper said it had secured credit facilities worth up to €10 billion (US$11.3 billion) in a move to cope with unprecedented volatility in energy markets. Enel said its long-term gas contracts were mainly indexed to Brent and the Henry Hub with residual needs covered on the spot market. Volumes for the winter were fully covered and its gas portfolio fully hedged, it said. European gas prices have soared as economies recover from the pandemic and supplies remain tight, piling pressure on energy firms and consumers alike.

International: Coal

Coal to make up 85 percent of total US power capacity to be retired in 2022: EIA

11 January: Coal-fired plants will account for about 85 percent of total US power capacity scheduled for retirement this year with natural gas and renewables taking a greater share of the supply, the US Energy Information Administration (EIA) said. The US power plant operators were scheduled to retire about 12.6 gigawatt (GW) of coal-fired generating capacity in 2022 out of the total 14.9 GW capacity set to be retired. The largest coal power plant scheduled to go out of service in 2022 is the 1,305 megawatt (MW) William H. Zimmer plant in Ohio, the EIA said.

Brazil extends coal use to 2040 under new ‘just transition’ law

6 January: Brazil will continue to use and subsidize coal as an energy source until at least 2040, according to a so-called “just energy transition” law published, which policy experts said goes against the climate and consumers. Broadly, “just transition” is a process aimed at ensuring the benefits of a green economy shift are shared widely, while supporting those who may lose out economically, whether nations, regions, industries, communities, workers or consumers. But Brazil’s new law – far from promoting the adoption of climate-friendly clean fuels – benefits coal producers in southern Santa Catarina state by prolonging the activities of coal-based power plants in the region for a further 18 years. Under previous policies, Brazilian subsidies for thermal coal-powered plants were supposed to end by 2027, and the authorisation for three large plants in Santa Catarina to operate was meant to expire in 2025. The new law reverses that, stating the government must buy, at a set cost, energy generated by a group of thermal plants in Santa Catarina. It mandates 80 percent of the energy be produced from coal mined in the region. Nearly half of Brazil’s electricity currently comes from renewables, including wind and hydropower, with the rest from planet-heating fossil fuels, government data shows. According to Abrace, an industry group of big energy users in Brazil, the new law will cost consumers an extra 840 million reais (US$147 million) per year because coal in the country is more expensive than clean energy like solar and wind.

International: Non-Fossil Fuels/ Climate Change Trends

New Czech government sees coal exit by 2033, backs nuclear power

7 January: The Czech Republic’s new centre-right government will seek to lay the ground for a possible phasing out of coal by 2033, it said when it released its programme, while also supporting nuclear power as part of its energy future. The previous government had not set a date for the coal exit although a state advisory council had recommended 2038. In 2020, the central European country generated 43 percent of its electricity from coal and 37 percent from nuclear power plants, according to Energy Regulatory Office data.

Indonesia starts tapping huge solar power potential

6 January: With a patchy track record on renewables, Indonesia’s energy mix is still heavily dependent on coal but if early signs of a jump in the take up of solar are sustained, it could have a transformative impact on Southeast Asia’s biggest economy. Despite being a tropical archipelago of 17,000 islands blessed with year-round sunshine, Indonesia ranks last for solar power capacity amongst the G20 nations. But demand is starting to pick up in the world’s fourth-most populous country, driven by policy changes, a steep fall in the prices of Chinese-made photovoltaic cells (PV) and environmentally conscious middle-class consumers such as Aji Tri Atmojo, an engineer at a dairy company. From the end of 2018 to November 2021, the number of private rooftop solar panel users has risen more than sevenfold to about 4,500, with an installed capacity of 44 megawatts (MW), up from just 1.5 MW, according to power utility Perusahaan Listrik Negara (PLN). The Indonesia Solar Energy Association (ISEA) predicts installed capacity for rooftop solar panels could top 1,000 MW next year and rise by between 3,000 MW and 5,000 MW per year starting in 2025. Coal powers about 60 percent of Indonesia’s 73,000 MW of electric generation capacity, compared with solar’s 180 MW, which includes solar farms and private rooftop PV cells. But, Indonesia has the potential for 400,000 MW of solar power, its energy ministry has forecast. Falling prices for Chinese PV cells has driven the rise in private installations since the solar power produced from the panels is cheaper than power sold from PLN. Regulatory changes have also spurred growth, with PLN reducing its minimum energy charges in late 2019, which lowers the amount of time for solar users to recoup their installation costs. Commercial solar users can also fully export their excess power to PLN as of August, up from only 65 percent previously, and they can participate in an Indonesian carbon market due to launch in 2025.

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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