Last week, NTPC announced that it has taken over a stressed power generation plant owned by the Bihar state government. The Central utility also announced that it has acquired full control of two joint ventures, in which Bihar government had equity stake. The two joint ventures are Nabinagar Power Generating Company Pvt Ltd and Kanti Bijli Utpadan Nigam Ltd.
The recently concluded Hanover Messe 2018 had on display a generous array of innovations in the electrical equipment space. It is widely discussed that the ubiquitous transformer hasn’t seen much of a radical change in its design for long years on end. One industry expert remarked that transformers are built in quite the same way as they were during the days of Faraday.
Recently, Bihar Grid Company Ltd (BGCL) was in the news when lending agency Power Finance Corporation sanctioned financial assistance worth Rs.1,350 crore, representing the entire debt component of a Rs.1,688-crore transmission upgrade scheme. The project aims at constructing 16 transmission lines, four associated substations and seven line-bay extension works in the eastern state.
The Department of Heavy Industry (under the Ministry of Heavy Industries & Public Enterprises) has selected 11 cities for subsidy disbursal under the first phase of the “Faster Adoption and Manufacturing of Electric and Hybrid Vehicles in India,” popularly known as the FAME scheme.
India’s solar sector is riding on a wave of optimism. The auction mechanism is working and tariffs are getting more and more competitive. The much talked about “grid parity” has since long been realized. Even tariffs of less than Rs.2.50 per kwh no longer raise eyebrows. Though India currently has around 16 GW of grid-connected capacity, which is far less than the targeted 100 GW by 2022, there is a plan in place that gives a feeling that we are indeed working towards a goal and not merely wishing things to happen. In the next two years, the plant to auction as much as 80 GW has been formulated and government appears resolute in its implementation plan.
The introduction of tariff-based bidding appears to have vivified the wind energy sector that was getting much lesser attention than solar in recent years. With two successful auctions by Solar Energy Corporation of India, the government is now confident that SECI auctions will help take the country realize its wind capacity targets.
In a very recent development, the Centre has announced its plans to conduct auction of a total of 20 GW of wind energy capacity, equally spread over two years, FY19 and FY20. Combined with an estimated 8 GW of auctions during the current year (FY18), these auctions will help attain the targeted wind energy capacity of 60 GW by 2022.
Nodal agency Solar Energy Corporation of India (SECI) has initiated its third wind energy auction. The scheme expects to set up capacity worth 2,000 mw through wind projects connected through the interstate transmission system (ISTS). This will help non-windy states honour their non-solar renewable purchase obligation (RPO). According to the tender documents, each participant will be allowed to bid for a minimum of 50 mw and a maximum of 400 mw. The developer will set up its wind project on BOO (build, own and operate) basis without any financial assistance from the Centre. The power purchase agreement will be entered with power distribution companies, for a duration of 25 years.
A total of 5 GW of wind capacity has been auctioned during the current fiscal year so far. In all, 8 GW is likely to be auctioned this year, followed by 10 GW each in the next two fiscals.
In the first auction conducted by SECI in FY17, PPAs for 1,000 mw of capacity were signed for a tariff of Rs.3.46 per kwh. The second auction, concluded in October this year, saw tariffs fall to a further 2.64 per kwh. In this auction, developers setting up plants in Gujarat, Tamil Nadu and Madhya Pradesh will be selling wind energy to non-windy states like Uttar Pradesh, Bihar, Jharkhand, Assam, Punjab, Goa and Odisha. The total capacity envisaged in the second auction was 1,000 mw.
The winners of the second auction include Renew Power (250 mw at Rs.2.64 per kwh), Orange (200 mw at Rs.2.64 per kwh), Inox (250 mw at Rs.2.65 per kwh), Green Infra (250 mw at Rs.2.65 per kwh) and Adani Green (50 mw at Rs.2.65 per kwh).
Including the third auction of SECI, a total of 5 GW has been auctioned in FY18 so far. Another 1.5-2.0 GW is expected to be auctioned in January 2018 followed by 1.5-2.0 GW. This makes a total of at least 8 GW of wind energy auctions in FY18. As discussed earlier, 20 GW of auctions will be held in FY19 and FY20, making a total of 28 GW.
India’s current wind energy capacity stands at 32 GW. With 28 GW of auctions to be conducted by March 2020, and allowing two years for commissioning, India appears to be on track to have 60 GW of wind energy capacity by 2022.
The official target for renewable energy is 175 GW by 2020, out of which 100 GW will come from solar, 60 GW from wind and 15 GW from other sources like small hydropower, biomass, waste-to-energy, etc. The government is confident of surpassing the 175-GW renewable energy target by at least 10 GW that will come from non-traditional sources like floating solar power plants over dams, offshore wind energy systems and hybrid wind-solar projects. Studies have been initiated to explore the possibility of installing floating solar power plants on the Bhakra Nangal dam in Himachal Pradesh. Coastal sites in Gujarat and Tamil Nadu are also being investigated for offshore wind power projects.
(This article’s author, Venugopal Pillai, is Editor, T&D India. Views expressed here are personal. The author may be contacted on venugopal.pillai@tndindia.com)
Also See: Tariff-based bidding a game changer for the wind industry
One option by which PGCIL could meaningfully engage in intrastate projects is through joint ventures with state power utilities, at least for specific projects.
Very recenty, there was a news report that Kerala State Electricity Board was seeking the involvement of Power Grid Corporation of India (PGCIL) in the southern state’s ambitious “Transgrid-2.0” project. The Rs.10,000-crore project envisages substantial upgrade to its power transmission network, and that too, with a conscious adoption of modern technology.
It is well known that even if almost all the erstwhile state electricity boards have been split into separate entities for generation, transmission and distribution, most of them still lack the technical expertise or the financial prowess to deal with complexities in their intrastate transmission networks. This is exactly why drawing upon PGCIL’s competency could be harnessed advantageously.
Special Cases
In some deserving cases, PGCIL is carrying out intrastate power transmission upgrade, thanks to extreme conditions that the state government-utilities would find difficult to contend with. For instance, PGCIL is implementing a project worth over Rs.5,000 crore to improve transmission network in topographically-challenging northeastern India, touching all northeastern states except Arunachal Pradesh. However, in Arunachal Pradesh and Sikkim alone, PGCIL has been entrusted with a Rs.4,700-crore project to improve transmission and distribution infrastructure. In Jammu & Kashmir also, PGCIL is involved in a Rs.1,800-project to connect the isolated Leh-Kargil area to the northern grid with a 220kV line. In these cases, PGCIL is playing the role of a “consultant” and has received the mandate from the Central government.
The real problem lies with states that are not “special” like the northeastern ones or Jammu & Kashmir, nor at the other extreme, are fully equipped to deal with their power transmission network.
TBCB might not work
State power utilities of course have the option of using the tariff-based competitive bidding mechanism that can bring in enterprise and investment, in a competitive environment. However, not many states of them have pursued this option aggressively although there are honourable exceptions like Haryana, Uttar Pradesh, Rajasthan, Haryana, etc. All said, the extent to which TBCB has percolated into intrastate projects, at the national level, is still shallow. Even if states float projects on the TBCB mechanism, PGCIL is free to bid just as it has successfully done in interregional lines. In such a case, states stand a potential chance to get PGCIL’s involvement. But the point is: Would PGCIL be excited enough to proactively participate in micro-level intrastate projects?
The JV option
One option by which PGCIL could meaningful engage in intrastate projects is through joint ventures with state power utilities, at least for specific projects. It has done so with Bihar, resulting in the formation of Bihar Grid Company Ltd, a 50:50 joint venture. PGCIL was engaged in similar talks with Odisha but the proposal did not take shape, ostensibly due to insufficient propulsion by the state government.
State governments must draw upon the rich technical and managerial experience of PGCIL and actively consider the joint venture route. To start with, JVs could be formed for specific but complex projects. Quite admittedly, formation of joint ventures would involve extended discussions and procedural formalities. The JV with Bihar, for instance, was formed in 2013 and has had its share of teething troubles. But once again, state governments would do well to realize that roping PGCIL has a JV partner is well worth the effort. For PGCIL too, an equity stake would mean closer bonding with the project, perhaps much more than it would in the capacity of a consultant.
(Photo: RTS Power Corporation)
(This article’s author, Venugopal Pillai, is Editor, T&D India. Views expressed here are personal. The author may be contacted on venugopal.pillai@tndindia.com)
Competitive bidding in the renewable energy space has never failed to surprise. Solar tariffs had their share of excitement with falling tariffs, and now it is the turn of wind energy. The very recent wind energy auction by SECI, its second, saw tariffs of Rs.2.64 per kwh, much lower than the Rs.3.46 per kwh seen in the first auction in February 2017, which by itself was an incredulous figure.
There are reports that NLC India (formerly Neyveli Lignite Corporation) encountered similarly surprisingly low quotes for its solar energy cum battery storage projects. Mahindra Susten (the renewable energy arm of Mahindra & Mahindra Group) has emerged the L1 bidder with a quote of Rs.298.8 crore for a 20-mw solar power project equipped with a battery storage system. NLC India was expecting quotes upward of Rs.500 crore and there were five bidders (including Adani Group, Sterling and Wilson, etc) that quoted below this benchmark figure.
Targeting total household electrification by end of 2018 would need significant acceleration in the current pace of project implementation.
Another acronym-centric power sector-related scheme “SAUBHAGYA” was introduced recently, adding to its predecessors—UJALA, UDAY etc. The latest scheme “Pradhan Mantri Sahaj Bijli Har Ghar Yojana” seeks to ensure electrification of all urban and rural households by December 31, 2018. Thus, the celebrated “Power for All by 2012” scheme of the then UPA regime will now see its culmination.
Electricity to every household should be the ultimate objective of the government. On paper, there is much achieved when it comes to rural electrification under the ongoing Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) that was known as the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) under the former UPA regime. If we consider that today even if rural electrification is claimed to be 99.5 per cent, there are still 4 crore households out of an estimated total of 17 crore that do not have an electric connection. This means that the extent of non-electrification at the household level is still a significant 23 per cent.
Villages versus households
By definition, a village is said to be electrified if at least 10 per cent of the households have an electricity connection. Besides, government-owned infrastructure like schools, offices, hospitals, etc should have an electric connection, for a village to be deemed electrified.
It may be recalled that in his Independence Day address of 2015, the Prime Minister had announced that all the remaining 18,452 non-electrified villages then would be electrified within 1,000 days, which is by around May 2018. It is understood that out of these 3,000 villages remain to be electrified as of today. It was a logical progression to target household electrification following village electrification.
By end of 2018, one can expect all households, both rural and urban, to have an electric connection. Of course, these households should satisfy two conditions—they should be willing to have an electric connection installed, and two, they should be located within reasonable grid limits. For those households where a grid-fed connection is not feasible, the government will provide solar power packs of 200-300W with battery banks. Households will be equipped with basic electric fittings—five LED lamps, one direct current (DC) fan and one DC power outlet. The government has clarified that in some cases, electricity connections may be provided free of cost but under no circumstances will electricity be supplied free of cost.
The country faces the ignominy of having over a fifth of its total number of households without electricity, even after seventy years of Independence. Complete household electrification will therefore define a new paradigm. For electrical contractors and low-voltage equipment suppliers, Saubhagya spells a big business opportunity. The nationwide project will also boost the consumption of solar power packs, LEDs, etc.
Massive outlay
The total outlay for “Saubhagya” is a massive Rs.16,320 crore that will be financed by gross budgetary support to the extent of 75 per cent. Of the total outlay, allocation to the rural sector is 86 per cent. With respect to financing, there will be government grant to the extent of 60 per cent of the total. State governments (utilities) are expected to fund 10 per cent of the total outlay, while the remaining 30 per cent would be raised through banks and other lending agencies.
How difficult
The biggest question now is whether electrification of around 4 crore (40 million) households will be possible by December 31, 2018, which is to say within the next 15 months. The pace of electrification, needless to say, will have to be accelerated significantly. For a frame of reference, 1.6 million households were provided electricity connections during the first five months (April to August) of 2017-18. For total national electrification to be achieved, this rate needs to be stepped up by around ten times.
Three states
According to official government statistics, Uttar Pradesh, Madhya Pradesh and Bihar have the worst levels of household electrification. In Bihar, only 47.4 per cent of households are electrified while in Uttar Pradesh and Madhya Pradesh, the respective levels are 51.5 per cent and 60.5 per cent. However, these states are all highly populated which is why these percentages translate to very high absolute levels. It is appalling to observe that just these three states account for nearly two-thirds of the total number of non-electrified households in the country.
Impact on idle capacity
Assuming that national household electrification takes place as planned, there would be an additional electricity consumption of an estimated 80,000 million kwh per year. This corresponds to electricity generation from 28,000 MW of capacity. An estimated 33,000 mw of power generation capacity is currently locked up due to the absence of power purchase agreements (PPA). If Saubhagya comes through, much of this stranded power generation capacity can be rekindled.
Photo credit: www.trekearth.com
(This article’s author, Venugopal Pillai, is Editor, T&D India. Views expressed here are personal. The author may be contacted on venugopal.pillai@tndindia.com)
In the latest Cabinet reshuffle, Piyush Goyal assumed charge as the new Railways Minister, while his power portfolio has a new incumbent in Ravi Kumar Singh. Goyal’s appointment as the railways minister is aimed at turning around the railways sector, whose image has taken a battering following the spate of serious accidents in recent history. There is all-round hope that Goyal will effect a significant transformation in the railways sector, based on his track record in the power sector.
Piyush Goyal assumed charged as the power minister with additional charge of coal and renewable energy, in May 2014. It must be admitted that in Goyal’s tenure, the power sector changed much, and very positively at that. What is most noticeable in Goyal’s approach was that his ministry looked not at just the power sector, but its adjacencies. The key areas in which he strived were ensuring coal supplies to starved thermal power plants, providing impetus to solar energy, and addressing demand-side management (DSM) issues by championing the cause of LED-based energy efficient lighting.
