THE C I I ENERGY BAROMETER MAY 2015 | VOLUME I , ISSUE I

Transparency,the game changer

A paradigm shifts for India’s coal sector

BANKING ONBIOFUELS

MADE INANDHRA PRADESH

ENRICHING THE ENERGY SECTOR‘We expect investments of $250 billion in the Indian power sector in the next five years’Piyush Goyal

‘We will attract investments of $30 billionand create 6 million jobs in the next decade’N Chandrababu Naidu

‘Biofuels are the new socioeconomic change agent’Nitin Gadkari

Chandrajit BanerjeeDirector General Confederation of Indian Industry

DG’S DESK

Energy is a critical ingredient

underpinning a nation's long-term

economic growth and security. Secure,

sustainable, available and affordable

energy is fundamental to modern

societies and to the well-being of citizens

as well as for industry competitiveness.

Nonetheless, energy supply is and will

remain a major challenge for developing

and developed countries alike.

In India as well, the energy sector is

facing tremendous changes and

challenges even as it strives to improve

the sustainability and security of supply.

With demand outpacing supply by a

huge margin and the goal of universal

electrification being far from reality, our

energy architecture has been under

severe strain. Moreover, rising energy

demand, coupled with less-than-expected

improvements in the production of

domestic crude oil, natural gas and coal,

has led to a strong reliance on imports.

The Government is taking many

proactive steps to address the challenges

in the energy sector. Indeed, we have

over the last one year witnessed the

implementation of several path-breaking

reforms across the energy value chain.

These include the introduction of the

‘New Domestic Natural Gas Pricing

Guideline, 2014’; setting a target to

increase coal production to 1 billion

tonnes by 2019, and putting in place an

efficient and transparent process for

auctioning and allotment of coal blocks,

amongst others.

Keeping in mind the twin concerns

of climate change and energy security,

renewable energy development in the

country is also undergoing a steep

development with a significant target of

175 GW of renewable power by 2022.

We, at CII, are committed to partnering

with the Government and industry through

our various Committees and Councils to

identify and enable key policy interventions

that would put the sector on a strong

growth trajectory.

To capture our efforts in this direction and

bring you news and views from the sector,

we are launching enGUAGE -The CII Energy

Barometer. The focus of enGAUGE, a bi-monthly

newsletter, will be to collate core stakeholder

perspectives to give you a definitive picture

of the progress of the sector as a whole.

The highlight of the first edition of enGAUGE

is an interview with Coal Secretary Mr Anil

Swarup, who provides a comprehensive

roadmap for increasing coal production.

We have also included the views of some of

the stalwarts of the sector on the near- and

long-term measures being taken to move towards

an energy-secure future for the country.

We hope you find value in this new

publication from CII, and look forward to

your feedback on our first edition.

1GAUGE

INSIDE

TRANSPARENCY,THE GAMECHANGER

PERSPECTIVEANIL SWARUP

10POWER PLAY:REVIVING THESECTOR

CEO.SPEAKANIL SARDANA13

16

8MADE IN ANDHRA PRADESH

STATE.MENTN CHANDRABABU NAIDU

ADB - FINANCING INDIA’S CLEANENERGY COMMITMENT

FINANCEANDREW JEFFRIES

2ENRICHING THE ENERGY SECTOR

ROADMAPPIYUSH GOYAL

4BANKINGON BIOFUELS

ROADMAPNITIN GADKARI

The overarching theme is to keep costs low, create a secure environment where our dependence on imports is reduced, and ensure that businesses prosper.

Energy security has to be at the top of the Government’s agenda. It is critical to provide 24x7 power to every citizen and make the country free of diesel generators.

There are two main aspects of an energy-secure India. One is the ability to influence and withstand international pressure and appropriately utilise global resources. Second is to be able to fully harness and optimise domestic resources like coal, wind, sun, water and technological superiority effectively.

The Government is looking to ramp up coking coal production rapidly to free India from coal imports. Coal India’s production has gone up by 7 per cent in the last year, and with modern technology and innovations, it can reach a target of 1 billion in the next 5 years. Clearly, India will not have to import thermal coal in the next two to three years.

The power sector is also witnessing strong growth. India is now producing 1 trillion units of electricity, an increase of 8.4 per cent in the last year. In fact, in these few months, the power sector has added 22,700 MW of installed thermal capacity; peak shortages are at 3.6 per cent, the lowest in the history of the nation, and the transmission sector has added 22,000 circuit kilometres of capacity. Coal production has grown by 8.3 per cent in the last 10 months, the highest rate in the past 23 years.

In the renewable energy sector, the Government is looking at innovative financing mechanisms, lowering counterparty risks and bringing down the cost of solar and wind energy. We are working on a model to get the cost of solar power down to INR 4.5 per unit, with 1 per cent increment over a year. Other solutions being considered include dollar tariffs, and an escrow facility which will work on a hedging mechanism. These will lower solar and wind power costs to sub-INR 4 per unit in the near future.

In the area of energy efficiency, the Government is looking to save 100

billion units of electricity consumed by 2017. In 2017-18 we should be able to demonstrate a saving of 10 per cent energy consumption vis-à-vis the current utilisation through LED lights, street lamps, and industrial efficiency. These savings could light up the lives of 280 million Indians who today are deprived of electricity.

These achievements have encouraged the Government to think more aggressively for the coming years and look at scaling up the targets while scaling down the time to achieve them. The overarching theme is to keep costs low, create a secure environment where our dependence on imports is reduced, and ensure that businesses prosper.

This is a shared responsibility of stakeholders across the spectrum - manufacturers, distributors, generators, consumers, the bureaucracy, Government, political establishments, judiciary and media. Everybody needs to build trust to achieve a growth of 100 per cent by 2019 in the power sector, with2 trillion units being generated,150 per cent growth in coal production with 1.5 billion tonnes of coal being produced, and renewable energy growing 5 times from the current60 billion units of energy.

We need to work together and take the responsibility to change India from an energy-starved nation to an energy-surplus one which is not only self-sufficient but also exports energy to the SAARC countries.

2 GAUGE 3GAUGE

ROADMAP

ENRICHING THE ENERGY SECTORMr Piyush Goyal, Minister for Coal,Power and New and Renewable Energy,addressed the session‘Securing India’s Energy Future’at the CII National Conferenceand Annual General Meeting 2015in New Delhi on April 7. Edited excerpts.

We expect investmentsof $250 billion in the Indian power sector in the next five years.Piyush Goyal

ROADMAP

4 GAUGE

Biotechnology should be used to create marketable value for biomass. Conversion of bio-waste into fuel pellets is becoming a lucrative industry. Agri-residue such as cotton stalk and wheat straw worth Rs 3,000 per acre is wasted by burning when they could instead be converted into fuel pellets which cost 40 per cent less than commercial gas.

An experimental project was initiated in Nagpur to convert cotton stalks into pellets for use in restaurants kitted with special stoves. It has today expanded into twelve factories employing over 15,000 people. The next step is to take this idea to every village to demonstrate how agri-waste can be a profitable resource. Pellets can also be made from municipal bio-waste after segregating elements like plastic, metal and glass.

systems, particularly in metros, to biofuels or electric. This will result in huge savings in fuel costs and yield a good internal rate of return, besides exponentially improving air quality and generating avenues to process municipal waste.For instance, Mumbai’s state transport utility BEST runs up a diesel bill of Rs 12,000 crores annually. By converting the vehicles to biofuel or electric, they can save about half that cost.

Often there are bureaucratic delays in matters that require the consensus of multiple Ministries. While the Cabinet has already decided to allow sale of blended biodiesel to both bulk and general consumers as long as standards and norms are followed, the Ministry of Petroleum and Natural Gas is yet to notify the formal order as they are conducting their own tests. Meanwhile, the Transport Ministry is implementing100 per cent biofuels which meet international standards - bioethanol, biodiesel and bio-CNG, while working on hybrid models like electric and biofuels.

Media should create public awareness about biofuels. CII must encourage industry to initiate pilot projects in biofuels with the specific target of commercial application in the near term.

Biogas is another avenue to convert waste into wealth. In Stockholm, Sweden, methane extracted from sewage water is being used to make bio-CNG to fuel buses. This innovation has been brought to Nagpur, where a joint venture is being formed with a Swedish company to produce biogas from sewage water. Within the next six months, at least a hundred buses will operate on this bio-CNG, while the residual water will be recycled for use in power generation.

In fact, Nagpur is the first city in India where the sale of sewage water has generated a royalty of Rs 18 crore for the Government of Maharashtra. The city also boasts buses running on 95 per cent bioethanol since the past six months.

Seventy per cent of India is wasteland. Biotechnology can help raise the cultivability of these wastelands, thus increasing production of feedstock from which non-edible oil can be extracted and used to make biodiesel.

Also, globally, a large volume of edible oils are discarded after being used for frying. Though this used oil is sold for Rs 22-28 per litre, a 35 per cent duty is levied on it to deter the temptation to mix it with edible oils. Adding copper sulphate to the oil to change its colour will help prevent adulteration and allow it to be used as a source of biodiesel.

One of India’s twelve major ports, West Bengal’s Haldia has eight oil refineries which import palm oil from Malaysia. The oil-residue is being processed into 3 lakh litres of biodiesel per day for use by trucks and railway engines, making Haldia the first major green port in India.The time has come to convert conventional fuel-based transport

5GAUGE

The National Green Tribunal recently banned diesel vehicles aged over ten years in Delhi to control air pollution. We need to concentrate on biofuels to reduce carbon emissions and improve air quality. The Transport Ministry is already working to bring biofuels, including bioethanol, biodiesel and bio-CNG, to the capital.

In fact, the highest priority should be given to mainstreaming biofuels as they can be socioeconomic change agents, with the potential to address complex issues like farmer suicides and agri-surpluses in the sugar, wheat and rice industries. Developing a bio-based economy and diversification of agriculture into the energy and power sectors is essential for the success of the ‘Make in India’ initiative and to boost the rural and agricultural segments.

Biofuels can also directly reduce petrol, diesel and gas imports which presently cost the nation over Rs 6 lakh crores annually.

BANKING ONBIOFUELSMr Nitin Gadkari, Minister for Road, Transport and Highways, and Shipping, addressed the session ‘Biofuels in Road Transport’ at the CII Biofuels Roundtable 2015 in New Delhi on April 15. Edited excerpts.

N itin Gadkari

Biofuels, a socioeconomic change agent, are the need of the hour.

I have personally been involved in experiments with biofuels and diversification of agriculture into fuels and power for a decade. I am hopeful that these will provide alternatives to farmers who are severely burdened by food crop failures. Prime Minister Modi is also very invested in this.

The best tool to fight vehicular pollution is ethanol as it contains 35 per cent oxygen which helps complete fuel combustion. Ethanol can reduce emissions by as much as75 per cent and save fuel costs of $149.2 billion. Incentives such as reduced taxation or excise duty exemption will encourage the use of renewable fuels. ASRTU suggests setting up biofuel outlets in metros like Delhi, Mumbai, Hyderabad and Bangalore to gauge customer response.We believe people will be more than happy to use these fuels.

Dr P S Anand Rao, Executive Director, Association of State Road, Transport Undertakings (ASRTU)

If India, with the largest diversity and quantity of biomass, cannot produce sufficient ethanol, there is cause for concern. The answer lies in new technologies, and the challenge lies in feedstock options. We must test our technologies on a variety of feedstock, and commercial plants need to be set up with multi-feedstock options. We need to look at algae as a feedstock as India has the distinct advantage of having the largest biodiversity of algae strains. We are also developing a roadmap for synthetic biology.

Dr Renu Swarup, Senior Adviser, Department of Biotechnology, Ministry of Science & Technology, Government of India

Road transport is the biggest GHG-producing segment in India, accounting for about 64 per cent of the sector’s total diesel consumption. A 50 per cent cut in GHG emissions per mile by 2030 is possible through a mix of conventional technologies and biofuels. From April 2016, it will be mandatory for passenger vehicles to follow fuel efficiency norms which will save 5,76,000 MTOE of gasoline, diesel and CNG worth Rs 4,000 crores. It will also prevent 14,40,000 MT of carbon dioxide emissions over a ten-year period.

Mr V K Srivastava, Additional Director, PCRA,Ministry of Petroleum & Natural Gas, Government of India

BIOFUELSTH

EBIG B

OF THEFUTURE

The power generation potential from bioenergy sources such as surplus biomass, bagasse, urban and industrial wastes, and animal waste is about 36,000 MW. Over a 100 MT of biofuels can be generated from these sources; add forest residues and energy plantations, and the numbers could be much larger. With this, we could replace over 80 per cent of petroleum product consumption for transportation. The benefit in terms of power generation is about Rs 2 crore per MW, and in terms of fuels, Rs 2 crore per 3,000 tonnes of biofuels. This also has the potential to generate 200 million man-days of direct employment, more if combined with feedstock supply management. The value biofuels add to the rural economy is huge and cannot be ignored.

Dr A K Dhussa, Former Adviser, Ministry of New & Renewable Energy, Government of India

The panel for 'Biofuels in Road Transport' (L-R): Mr G S Krishnan, Dr A K Dhussa, Mr Pramod Chaudhari,

Mr Nitin Gadkari, Dr Renu Swarup, Mr V K Srivastava, Dr P S Anand Rao, Ms Soma Banerjee

The time has come to move towards a bio-based economy. Flexibility of feedstock is essential: ethanol can be made from a variety of feedstock - sugarcane, sweet sorghum, etc. A clear and consistent roadmap is necessary to take biofuels to the next level. A Bioenergy Mission or Task Force is required to take the momentum forward in an organised manner.

Mr Pramod Chaudhari, Chairman, CII National Committee on Bio-Energy and Chairman,Praj Industries Ltd

With bioenergy, we will need to place lesser emphasis on electricity and far more on transportation and heating. 2018 could be the biofuels year for which the policy framework is being set now.

Mr K Krishan, Chairman, Malavalli Power Plant Pvt Ltd

Biofuels have reached a crucial point in India with technology waiting to be pushed to the commercial side. We at the MNRE are working towards policy measures to enable this push. This sector is a work-in-progress as development of second generation biofuels and creation of biomass supply are still complex issues. Also, adherence to targets is essential as actual implementation and production have not kept pace with intention.

Ms Varsha Joshi, Joint Secretary, Ministry of New & Renewable Energy, Government of India

Proliferation of biodiesels depends on the fuels being genuinely sustainable and cost-efficient. Successful inclusion of biodiesel in the fuel mix of railways promises to change the landscape of freight and public transport in India by reducing our dependence on imported fossil fuels, providing a clean energy alternative, and generating employment for a large segment of the population across urban and rural India.

We need to address the pricing mechanism for biofuels across the supply chain. Policies such as the Renewable Purchase Obligation could be developed for oil marketing companies and the National Clean Energy Fund could be used to support technological development. Greater involvement of banks and financial institutions in the sector is an urgent necessity.

Dr V K Saraswat, Member, NITI Aayog, Government of India

The mandate for ethanol blending in India has to be immediately increased. A roadmap to achieve the 20 per cent level over the next 3-5 years must be formulated. We also need to support second generation ethanol production.

Mr G S Krishnan, Regional President, Novozymes South Asia Pvt Ltd

Ms Varsha Joshi in conversation with Mr Pramod Chaudhari

6 GAUGE 7GAUGE

STATE.MENT

MADE IN ANDHRAPRADESH

During his second term in officeMr Naidu had outlined his Vision 2020, to provide welfare measures like low-cost education and healthcare to the state’s denizens while systematically eradicating poverty by generating rural employment and upgrading small investors into largecorporations to raise profitability andstability. This vision is being recalibrated to account for the changed circumstances, and will now focus on the development of the 13 districts of residuary Andhra Pradesh, covering both social and industrial development as has been the hallmark of his governance.

Speaking at the Indo-Japan Energy Forum 2015 co-organised by the Confederation of Indian Industry and the New Energy and Industrial Technology Development Organisation (NEDO) on 29 April, Mr Naidu asserted that the new capital region of Andhra Pradesh will offer industry a USD 30 billion opportunity in the next decade.It will also see the creation of over6 million jobs in traditional ventures as well as new ones such as smart cities, advanced transport systems, clean energy, efficient power and water utilisation processes, and manufacturing.

The new state of Andhra Pradesh is the eighth largest in India, with a population of almost 50 million. It has several intrinsic advantages, including a strong agrarian base, abundant coal, granite and mineral reserves, and a range of renewable energy resources like sun, wind and water. Decades of proactive governance has created financially-sound state utilities and efficient public infrastructure like power and road networks. This has given the government a strong foundation to build the new state upon, with the agenda to enable infrastructure and encourage mega strategic projects through targeted policies and transparent governance. Several key policy interventions are already in place, including a business-friendly single-desk system to allot clearances

for certain categories of projects within 21 days, and more are on the anvil.

In fact, Andhra Pradesh is one of the three states – along with Delhi and Rajasthan – to be chosen for the Central Government’s flagship Power For All (PFA) programme. The state has enlisted both conventional and renewable sources in its fuel mix to balance availability, accessibility and affordability for all types and classes of consumers. Clean coal technologies are a major focus area, and the state has started commissioning super- and ultra-supercritical power plants. APGENCO, the state generation utility, is the first in the country to commission an 800 MW super-critical power plant. In addition, it is already planning an ultra-supercritical 4000 MW project in Srikakulam. NTPC is installing a similar project at Vishakhapatnam.

Meanwhile, Andhra Pradesh is targeting 10,000 MW of solar power (10 per cent of the national target of 100 GW) by 2022, about a fourth of its total estimated potential of 38,500 MW. Wind is another core resource, with 5,000 MW capacity being targeted by 2019 of the untapped potential of about 13,000 MW. State transmission utility APTRANSCO is implementing a green energy corridor to evacuate 3,000 MW of solar and 1,000 MW of wind energy.

The Government of Andhra Pradesh is looking to partner with global investors to set up state-of-the-art infrastructure and manufacturing systems. Aligned with community and environmental sustainability goals, the creation of this hi-tech, knowledge-based society is likely to make the state India’s commercial gateway to South East Asia by 2050. It will also take Andhra Pradesh closer to its target of having the highest Happiness Quotient among its Indian counterparts by 2029.

AP 2.0THE NEW VISION

N Chandrababu Naidu has always been a man with a mission. In his first run as Chief Minister from 1995 to 2004, he developed the erstwhile state of Andhra Pradesh into one of India’s most progressive and profitable with a series of bold and far-reaching reforms, including leveraging the then-nascent information technology industry to transform Hyderabad into a global economic hub. Now, he is back to lead the post-bifurcation state to an even higher zenith.

Primary SectorUrban DevelopmentIndustriesInfrastructureServicesSkill DevelopmentSocial Empowerment

7 MISSIONS

5 GRIDS

WATER

GAS

ROAD POWER

FIBRE

5 CAMPAIGNSEnrollment of Students

Environmental Sustainability

Victory over Poverty

Revival of Agriculture

Cleanliness and Health

9GAUGE

We will attract investments of

30 billion and create 6 million jobs in the next decade.

$

N Chandrababu NaiduChief Minister of Andhra Pradesh

My vision is to make the new Andhra Pradeshone of topthree states in India by 2022.

8 GAUGE

What are some of your key takeaways since the first ordinance was passed and the recent coal auctions?

The use of IT applications to achieve transparency in a situation as complex as the coal auctions is the biggest key takeaway here. The coal issue is complex because of cancellation of blocks by the Supreme Court. In the past all actions related to coal were questioned, some rightly and some not so rightly. Given the many

stakeholders in this sector, bringing in transparency and objectivity was essential to mitigate challenges. This is why we opted for the auction route and it seems to have gone fine so far. In fact, the auctions have clearly demonstrated that even a complex issue such as coal can be tackled efficiently and efficaciously through application of IT in a transparent manner.

In your earlier avatar you were looking to put various processes online. Taking this lesson forward, do you think this could be the way to bring transparency into government functioning like public procurement for other mineral resources?

Absolutely. This is just the beginning. Natural resources are going to continue to be handled by the Government and in future this process will be used.

In the past, we have seen that companies have projected or bid aggressively but have been unable to follow through accordingly. What is your assessment of this?

The Ministry’s objective is to create a process that generates optimum value of the natural resource for the Government. My assumption is that the bidders would have done what they did with their eyes wide open.

Our primary focus was on putting together a transparent process for coal auctions. As long as the process is transparent the results are not in our hands. The revenue will go to the State Governments. If the companies do not mine and pay as per the mining plan, there is an option to invoke their performance guarantees and re-auction the blocks.

In your view will this be the process for the future blocks as well? Do you think this auction process can become the model of allocation for other minerals?

We would follow the same auction methodology with minor

modifications on the basis of our last experience. But this process would by and large remain the same for all 204 blocks.

As far as the other Ministries are concerned, it will be their decision. But my understanding is, having demonstrated a successful auction process it would be useful for other Ministries to customise this for their purpose.

The Government has set a target of coal production of 1 billion tonnes (BT) by 2019 – 2020. What in your view are the milestones to achieve this target and what is the roadmap to reach these milestones?

The Ministry is targeting coal production of 1.5 BT. Of this, 1 BT will come from Coal India and the remaining 500 million tonnes (MT) will come from non-Coal India sources, particularly from the mines that are presently being auctioned or allocated to non-Coal India entities.

For the 42 Schedule-II mines, the peak rate is 90 MT and for the 32 additional Schedule-III mines the peak rate is 130 MT. That said, the 204 coal blocks together have an estimated coal production potential of over 800 MT. Therefore, we can safely assume that by 2020, around 500 MT will be produced from these mines.

For the mines currently held by Coal India, the Ministry has drawn up a mine-wise plan clearly detailing what is required to take a mine from level X to level Y. This framework includes evacuation, land acquisition, environment clearance, law and order, etc. All issues associated with increasing production or productivity have been clearly identified and a strategy has been chalked out for each mine.

In fact, the strategies are already being implemented. The progress is evident in the coal production in recent months. To my knowledge coal production has never grown by 7 – 8 per cent in the past decade, so this has given us hope that we can ramp up production.

Mr Anil Swarup assumed charge as Secretary, Ministry of Coal in October 2014. In less than six months, he has not only successfully put in place a transparent process for coal auctions and spearheaded the first ever e-auction of coal in India, but has also drawn out the roadmap to achieve the target of 1 billion tonnes of coal production by 2019 - 20. In an interview with CII this April, he discussed his plans for the sector. Edited excerpts.

In conversation with Mr Anil Swarup,Secretary, Ministry of Coal

PERSPECTIVE

10 GAUGE 11GAUGE

Transparency,the game changer

A paradigm shifts for India’s coal sector

Transparency,the game changer

A paradigm shifts for India’s coal sector

What are the challenges to achieving the 1.5 BT targets?

Evacuation, environment and forest clearance, land acquisition, and local law and order problems are the four major challenges to varying degrees in different mines. Fortunately the Ministry has been able to identify these issues and we will follow a specific strategy to address each issue.

For example, earlier all evacuation activities were done by the Railways. Now a decision has been taken, along with State Governments, to set up Joint Ventures in each concerned state. For these JVs each evacuation line will be an independent profit centre, unlike Railways where evacuation is one of their many projects.

The State Governments have in principle agreed to this arrangement and Memorandums of Understandings will be signed with them within the next month. The Ministry is in the process of circulating a draft which is at various levels of approval. This arrangement will work especially well in the coal-bearing states as the intent is to move coal from accessible to inaccessible areas.

These will primarily be projects to evacuate coal to the main lines. India sits on 300 BT of coal reserves. However, there is no evacuation where these reserves exist. If this issue is addressed, production will not be a challenge.

We have situations where it takes around 12 hours to fill a rake, while in others it is done in an hour

and a half. Therefore, the Ministry is also considering mechanisation to improve the turnaround time for efficient evacuation.

Which entities are a part of the JVs being formed?

The JVs will be formed between

Coal India with 64 per cent stake,

Ircon with 26 per cent stake, and

the concerned State Government

with 10 percent stake. The State

Governments are necessarily party

to the agreements because many

issues rest with them. It is believed

that once they have a stake in the

JVs the clearances will move faster.

The major chunk of investment

will come from Coal India and

Ircon.

How are the other challenges of land acquisition, law and order, etc. being addressed?

Like I mentioned, a clear strategy is

already being implemented.

All coal-related projects with the

Ministry of Environment, Forests

and Climate Change are being

reviewed on a monthly basis, and

the benefits of a transparent

application and monitoring process

are already visible. Clearances are

taking lesser time. In the Western

Coalfields, a mine will be opened

for mining every month for the

next 12 months.

Also, state-related issues such as

land acquisition and local law and

order are being addressed in

conjunction with state officers.

Partnering with the states has

clearly changed the whole

landscape.

For example, in West Bengal, a

few blocks were stuck for the

last six years because the State

Government was not providing

land to Coal India for mining.

Once they realised that the royalty

from mining would accrue to the

state, the matter was resolved.

What is the Ministry’s approach to coal swapping?

We are contemplating two types of swapping. Bilateral swapping, which has been approved, is relatively simple. It is being done at the level of existing linkages where coal is unnecessarily being carried to users located at a greater distance when it can be utilised for closer units. So far 15 swaps have happened across the country, with the first set of swapping entailing a saving ofRs 1,100 crore annually. Ultimately, swapping is likely to lead to savings of Rs 6,000 crore per annum.

We are also contemplating other options like trilateral and multilateral swapping. These are more complex as multiple stakeholders are involved and these take longer to execute.

What are the challenges in executing the swapping?

The challenges are multi-fold. Initial swapping was simple but in trilateral and multilateral swapping, while one entity may have to sacrifice, gains will accrue to the other entity. The mechanism of transferring the gain from one stakeholder to the other will need to be worked out. The Government is facilitating such negotiations with the stakeholders.

What is the objective of the Government behind auctioning coal linkages?

We are not just looking at the auctioning coal linkages but are looking into the whole process of allotting linkages. The reason behind such thinking is that for any such allocation we have to clearly identify the price at which the coal linkage should be given and who it should be given to.

There has to be transparency in this process as well. We are evaluating whether the pricing and allocation methodology is transparently determined in the existing system.

Given that energy is the engine that drives the pace of an economy, for India - an aspiring economic powerhouse, a well-oiled power sector is critical. Our power sector has had a bumpy ride over the last 4-5 years, affecting all key stakeholders:

Consumers - with load-shedding and irregular supply of power due to financially distressed distribution utilities

Private and public sector companies - with their assets operating at sub-optimal levels due to lack of fuel supply (both coal and gas) and uncertainty from the cancellation of captive coal blocks

The Government - with an increased current account deficit arising from coal imports

Community - impact of land acquisition disputes

While the new Government is pursuing measures to address exigencies such as the reallocation of captive coal blocks, we need a broad-based and holistic approach to alleviate the long-term structural issues plaguing the sector.

CEO.SPEAK

12 GAUGE 13GAUGE

Mr Swarup speaking at the CII Roundtable on 'Impact ofCoal Reforms on the Power Sector' earlier this month.

POWER PLAYREVIVING THE SECTOR

Transmission planning should enable the system to always remain ahead of generation capacity.

Mr Anil Sardana, Chairman CII National Committee on Power and Managing Director & CEO, Tata Power Company Ltd

It is also critical to reform the domestic coal mining sector to attract private investment and open up mining to entities beyond Coal India. Additional initiatives are required to improve coal logistics to ensure smooth offtake of the increased production.

While the bulk of India’s coal requirement should come from domestic sources, imported coal does have a role to play in our energy mix. This is especially so in the coastal states where it is more economical to import coal than transporting domestic coal or investing in augmenting transmission infrastructure to wheel power to the demand centres.

The risks associated with imported fuel can be mitigated through Government to Government securitisation of fuel resources outside India. This approach is adopted by countries such as Korea, Japan, Australia, etc.

G2G engagement is also essential to lock in natural gas options, a fuel source India must have in the mix given the increasing peaking power requirements. The absence of credible peaking power options has resulted in an inefficient and sub-optimal model where the less suitable coal-based plants are being deployed to meet the requirement.

Addressing the Generation Challenge

The generation sector is facing a plethora of issues which may lead to a slowdown in capacity addition. A number of challenges need to be addressed to turn this sector around.

Managing Coal Shortage

Domestic coal production has not kept pace with the growth in generation capacity. Further, India’s share of the global investment in the exploration of coal mines is an abysmal 0.5 per cent. The result is an acute shortage of coal, leaving around 15 GW of thermal power generation capacity stranded across the country. The demand for imported coal has escalated to an alarming 200 million tonnes per annum (MTPA), despite India having 7 per cent of the world’s coal reserves.

The Government is addressing the issue of coal shortages through allotment of coal blocks for captive production and through the augmentation of domestic coal production by Coal India. The recent coal block auctions witnessed aggressive bidding, with all six power sector blocks being won at an additional premium after reaching zero fuel prices. Consequently, private power producers with a cumulative capacity of about 10 GW, who bid the highest, are staring at around 65 paise per unit under-recovery in variable cost.

CRISIL estimates that these players might clock under-recoveries to the tune of Rs 1,350 crore in 2015-16 because variable tariffs will not cover mining costs and production-linked payments to the Government. Therefore, to safeguard returns, they will have to evaluate increasing fixed tariffs. But developers who have already signed PPAs – accounting for a third of the 10 GW capacity – will not have this option. Even those that are yet to sign PPAs will find it difficult to quote significantly high fixed tariffs due to intense competition. So the offset available, at best, will be partial.

The Government has also set a steep production target of 1 billion tonnes over the next five years for Coal India. To ramp up coal production, it is necessary to catalyse the exploration and development of coal mines. Allotment of coal blocks with pre-approved environmental clearances may be a feasible solution.

The introduction of the new Standard Bidding Documents for Case I and Case II bids has not been effective. The Develop-Build-Finance-Operate-Transfer (DBFOT) model proposed for Case II bids is perhaps better suited for businesses such as road and transport, and not so much for generation.

Recently, all private players in the power sector pulled out of ultra-mega power project bids in Odisha and Tamil Nadu, leaving only NTPC in the fray. The Ministry of Power perhaps needs to revert to the Build-Own-Operate (BOO) bidding framework to ensure lower tariffs and better plant operation efficiency. The new framework should also allow complete pass-through of fuel price cost and make fixed costs a biddable parameter along with conversion efficiency.

Several initiatives are needed to accelerate power generation projects, including a fast -track mechanism for land acquisition for infrastructure, and procedural and structural reforms for environmental and other statutory and non-statutory clearances. Time bound procedures for clearances, with provisions for deemed permission to avoid stalled projects, are also critical. In addition, India needs to adopt a robust policy to guide state regulatory commissions in planning bulk fuel supply / procurement in line with the basket of fuels.

Aligning the Transmission System

Increasing congestion in inter-state transmission systems has created a fragmented market despite the presence of a national grid. Slow intra-state transmission capacity addition has also significantly affected power transmission.

Over the next few years, the demand for transmission capacity is expected to increase dramatically, driven primarily by increases in generation capacity (20 GW per year versus 10 -12 GW per year in the past). Also, emerging requirements of open access, trading, and inter-regional transfers will increase demand. Besides enhancing capacity, the

transmission system has to be made more flexible with higher margins/ redundancies to enable integration of power sources. Transmission planning should enable the system to always remain ahead of generation capacity.

The key challenges to augmenting transmission capacity include obtaining land, right of way, and statutory clearances for the project. A fast-track clearance mechanism for land acquisition and procedural reforms for statutory clearances are essential to accelerate growth across the power value chain. While Power Grid Corporation of India, the central transmission utility, is executing inter-state transmission projects at a reasonable pace, intra-state projects need attention.

Transmission capacity can also be augmented by upgrading the thermal rating of existing lines by technology adoption, such as using high capacity conductors.

The boom in renewable power will be rendered ineffective if not accompanied by a corresponding enhancement in transmission capacity. Hence, implementation of the green corridors is of utmost importance. Also, it is critical to quickly adopt technologies to create storage capacity to ensure adequate system balancing capabilities.

Restructuring the Distribution Business

The losses of India’s state electricity utilities have once again assumed alarming levels, having come a full circle since the implementation of the Electricity Act of 2003 and various central schemes for financial restructuring of power entities.

Reasons for the discoms’ financial distress include:

• Lack of cost-reflective tariffs,with a cost-revenue gap of about Rs 0.5 per unit

• The national average of AT&C losses continue to be 25 per cent, with many states reporting over 40 per cent losses

• Slowdown in market development

Innovation

Energy security also implies a thrust on innovation – an area where both the private sector and the Government have not invested adequately. While initiatives discussed earlier will facilitate long-term energy security, the issues of the future will be different from the current ones.

Future issues will revolve around the environment, and optimum utilisation of natural resources. Hence, focused research and innovation in the following areas is essential:

• Making Indian coal more environment-friendly by enhancing the efficiency of washeries to

reduce ash and putting in place relevant policies for this purpose

• Energy storage to handle the expected scale-up in renewables, which can also serve as peaking solutions

• Optimum utilisation of allied resources like land, water and fossil fuels in the power sector

In conclusion, it would be appropriate to state that persistent and consistent policy effort is essential to turn around the sector and to make it an effective catalyst for Government initiatives such as the ‘Make in India’ programme.

It will also be the roshni that will make the dream of achhe din a reality for India.

has led to stranded / idle generation capacities and minimal investment in network upgradation

• Poor implementation of open access due to high cross-subsidy surcharge

Lack of distribution reforms has strained the segment’s growth. This has led to ripple effects on the generation and transmission segments as well as on the economies of the states.

Restoring the financial health of state electricity utilities and improving their operating performance continue to be critical issues for the sector. Accelerated distribution reforms with efficiency improvements and introduction of cost-reflective tariffs are the need of the hour.

The Government is moving in the right direction with stakeholder engagements on the latest amendments to the Electricity Act proposing a segregation of wires and supply businesses. This new model is expected to increase private sector participation and competition in the supply sector, and bring in focus on efficiency, cost competitiveness and reducing AT&C losses. Increased competition will not only increase consumer choice but also improve consumer focus for a sector which is otherwise apathetic to consumer needs like reliable 24x7 power supply, accurate and timely billing, etc.

Rapid but flawless execution of wires and supply segregation will enhance the health of the distribution sector which is critical for the growth of the entire value chain.

14 GAUGE 15GAUGE

Mr Sardana addressing the CII Roundtable on the 'Impact of Coal Auctions on Power Sector' at New Delhi on 8 May 2015

Accelerated distribution reforms

with efficiency improvements and

introduction of cost-reflective tariffs are

the need of the hour.

energy resource rich areas to the national grid (solar and wind power in Rajasthan, hydropower in Himachal Pradesh), as well as the transmission interconnection and some common facilities for Gujarat’s Charanka solar park. ADB’s recently approved loan programme with the Indian Renewable Energy Development Agency (IREDA), which lends funds to RE projects, is expected to provide a significant boost to the sector.

We are working closely with the Power Grid Corporation of India on their green energy corridor initiative. We are also engaged with the Ministry of New and Renewable Energy and Solar Energy Corporation of India (SECI) on the Government’s solar parks programme.

ADB’s public sector assistance helps create an enabling environment for investments in renewables, particularly where transmission connectivity to a distant grid is a key constraint in opening up investments in resource rich locations. Increasing transmission capacity and deploying grid management tools will help India’s power grid absorb higher penetrations of variable renewable energy more effectively.

Our intent is to develop stronger state utilities and better functioning systems by working with distribution companies to provide metering and other means to reduce technical and commercial losses and improve their financial health. In a country as large as India, targeted and sustained assistance over time in select states enables us to make a more meaningful impact in specific areas.

Given the massive financing needs,

two key questions we ask ourselves

are, how do we remain relevant,

and how do we make the maximum

impact with a finite amount of funds.

We do this in several ways. As an

early financier in India’s solar PV

and CSP projects, we have

demonstrated the success of projects

funded by the PSOD, which has

helped manage the risk perception

and attract investors to the sector.

The PSOD is constantly working to

attract more financiers, in

particular investors from other

parts of Asia, to the Indian RE sector,

thus leveraging additional foreign

capital alongside ADB investments.

This includes ADB establishing a

new $400 million private equity

fund named Asia Climate Partners

to promote RE across Asia with the

UK Government, Japan’s Orix

Corporation, and Robeco SAM

from the Netherlands.

To promote solar power knowledge

sharing, ADB has founded the Asia

Solar Energy Forum, an international

platform that helps private sector

companies, government

representatives and other

stakeholders interact, develop

partnerships, and organise major

conferences. Officials and private

sector executives from India have

been active participants. Within

India, ADB has funded solar power

knowledge and capacity building

activities through IIT Jodhpur in

Rajasthan, and at the Pandit Deendayal

Petroleum University in Gujarat.

The Government of India’s increased targets for renewable energy (RE) capacity expansion are a ‘quantum leap’ and underscore its commitment to expand clean energy contributions into the country’s power sector. The Asian Development Bank (ADB) supports India’s RE sector through both sovereign and non-sovereign lending windows.

Our public sector energy operations in India involve concessional funding of projects agreed upon with the Ministries of Power and New and Renewable Energy to support renewables, and with the Department of Economic Affairs of the Ministry of Finance. Our rolling pipeline of projects includes borrowers from public sector utility companies and state and central level institutions.

ADB’s Private Sector Operations Department (PSOD) offers non-concessional commercial financing to private companies, public entities and projects, including independent power projects. It also leverages funds from commercial sources, and provides debt and equity funding to RE project developers. ADB has funded wind and solar projects in multiple states including Maharashtra, Gujarat, Karnataka, Madhya Pradesh, Rajasthan and Telangana. The 40 MW Dahanusolar photovoltaic (PV)power project - India’s first utility-scale solar PV facility, and a 100 MW concentrated solar power (CSP) project in Rajasthan were successfully commissioned in December 2014. ADB has also invested equity in early-stage off-grid energy companies such as Simpa Networks, which provides off-grid solar services in Uttar Pradesh.

Since renewable energy generation is still predominantly a private sector business, much of ADB’s support for public sector projects is indirect. These include transmission programmes that connect clean

Andrew Jeffries Energy Head (India), Asian Development Bank

Given the massive financing needs, two key questions we ask ourselves are, how do we remain relevant, and how do we make the maximum impact with a finite amount of funds.

FINANCE

FINANCING INDIA’S CLEAN ENERGY COMMITMENT

ADB’s dual approach thus includes helping both public and private sector projects leverage further investments, and promoting an enabling environment for future investment and sector growth. Along with our knowledge sharing activities, we are looking forward to supporting India in its journey towards achieving its ambitious renewable energy goals.

16 GAUGE 17GAUGE

Image: Shutterstock

POWER

India plans to hike imports of liquefied natural gas (LNG) to revive power plants with a cumulative gas grid-linked generation capacity of 24,150 MW worth over Rs 1 trillion of investment. Of these, 60 per cent are at the threshold of becoming toxic assets while the rest are operating below capacity due to low domestic gas output.

Increased LNG imports will boost power supply by 79 billion units valued at about Rs 420 billion, and could spur spot prices of LNG trading at aboutUS$ 7.60 per MMBTU in Asia. The Gas Authority of India will be importing LNG to revive these power plants, located outside Gujarat, to improve generation.

To make imported gas affordable to consumers, the Union and State Governments will allow tax concessions while the importers will charge less for regasification, transportation and marketing.

India to hike LNGimports to boost power generation

India's electricity generation registered a growth of 8.4 per cent during 2014 – 15, touching the 1 trillion units mark for the first time. Since 1991-92, electricity generation has clocked a compounded annual growth rate (CAGR) of 5-6.6 per cent, with the most prolific contributors being the coal-based power stations which grew at an annual rate of about 12 per cent. Of the 22,566 MW added during 2014-15, the thermal power sector contributed92 per cent (20,830 MW).

Government data reveals a decline in energy shortage to 3.6 per cent from 7-11 per cent over the past two decades due to capacity addition, higher generation and improved transmission.

India generates1 trillion unitsof electricity a year for the first time

Private miners and mining companies owned-and-operated by provincial governments will be able to participate in the third phase of coal block auctions, due to start in May 2015. But the Government’s decision to not implement a free pricing regime will not allow the miners to set sale prices for end-users. Also, no private, domestic or foreign entity would be permitted to export the mined coal.

However, options are still being reviewed for the final price regulating mechanism. One option is the weighted average method based on notified coal price charged by Coal India and international coal prices. Further, the successful bidders of the 94 coal blocks to be auctioned through the competitive bidding route for commercial mining will not face end-use restrictions.

No free pricing regimefor commercial coal miners

The Government has undertaken major initiatives for rapid implementation of power projects in the eight North Eastern states, and has earmarked investments worth Rs 10,000 crore for the sector.

It has approved a scheme to strengthen the transmission and distribution system in Arunachal Pradesh and Sikkim at a cost of Rs 4,754 crore. In addition, the Government has initiated the North Eastern Region Power System Improvement Project for the other six states at an outlay of Rs 5,111 crore, including budgetary support of Rs 2,600 crore. There is also a plan to restart the Teesta Hydroelectric Project in Sikkim with an investment of Rs 13,000 crore.

Some transmission projects nearing completion in the region include the 6,000 MW Bishwanath Chariali-Agra line, the Rs 1,000 crore Bongaigaon-Balipara line, and the Rs 500 crore Silchar-Imphal line.

Centre to investRs 10,000 cr in theNorth East power sector

NEWS

The third round of coal auctions, set for May 2015, will see 23 ready-to-operate blocks being offered through forward- and reverse-bidding mechanisms. The Government expects the auction to fetch proceeds of over Rs 2 lakh crore. 15 mines are earmarked for the power sector and the remaining eight for unregulated sectors like steel, cement and captive power.

So far, of the 204 coal blocks cancelled by the Supreme Court, the Government has allocated67 coal mines through auction and allotment in 2015 in accordance with the provisions of theCoal Mines (Special Provisions) Act, 2015.

The Government has earned Rs 2.09 lakh crore from the first two rounds of the auction of 29 coal blocks, and the entire amount will be transferred to the governments of the states where these mines are located. Allocation of 38 mines to state-run companies is likely to take total proceeds toRs 3.35 lakh crore over the next 30 years.

The seven coal-rich states where the mines are located include Jharkhand, which has the maximum number of coal blocks at 20, followed by Chhattisgarh, West Bengal, Madhya Pradesh, Maharashtra, Odisha and Telangana. Consumers are also set to benefit from the resultant reductions in electricity tariffs, saving over Rs 69,000 crore.

Auction of23 coal blocksto earn Rs 2 lakh crore

Coal India missed its FY2014 target with a production of 463 million tonnes (MT), but recorded a 7 per cent growth in FY2015 with494 MT, its highest growth rate in about 2 decades. The public sector unit is believed to be on course to achieve its production target of 550 MT for the current fiscal, part of the overall target of a billion tonnes by FY2020.

Supply side issues are also being addressed. With higher domestic production and increased imports (primarily by power plant developers), the stock position at thermal power plants has improved despite persistent problems of coal evacuation.

Coal India outputramps up stocksat power plants

HYDROCARBONSFirst-ever gas price cut from April 1The price of domestic natural gas saw a7.6 per cent reduction from USD 5.61/mmBtu to USD 5.18/mmBtu from April 1, 2015 due to the global benchmark prices staying considerably low in the second half of 2014.The price was hiked to USD 5.61/mmBtu from USD 4.2/mmBtu in November 2014 after a gap of over five years.

The new price, based on net calorific value, will be valid for the first half of 2015-16. This is likely to have the maximum impact on the state-run ONGC (which produces three-fourths of domestic gas) and Oil India, and private player Reliance Industries.

India’s current gas price is far lower than the USD 11.90/mmBtu that China pays its gas producers.

State-run oil companies ONGC, OIL and BPCL will invest USD 6 billion in the next four years to develop the Rovuma Area 1 gas field off the Mozambique coast. The field is estimated to hold recoverable gas reserves of up to 75 trillion cubic feet. ONGC Videsh and BPCL units together hold 30 per cent interest in the field.

With the capacity to produce 20 MT of LNG annually, this project will be the world's largest LNG export site after the Exxon Mobil-run RasLaffan in Qatar. LNG production is targeted to start from end-2018 or early 2019.

Investments of USD 6 billion inMozambique on the anvil

18 GAUGE 19GAUGE

21GAUGE

In a bid to revive Rs 60,000 crore worth of stranded power projects, the Cabinet, on25 March, 2015 approved financial support for gas-based power generators to help them use costly imported LNG to generate electricity.31 stranded power stations with a combined capacity of 14,305 MW can now bid for support from the Power System Development Fund (PSDF) to generate 30 per cent plant load factor using imported LNG.

The Government approved a reverse bidding process through which power plants will quote a rate, the subsidy for which will be released through PSDF. The fund, intended for grid stability and security, will be used to subsidise gas-based plants which are best suited to meet the peak load demand.

The bidding, to be conducted by MSTC, is set to begin at Rs 5.5 a unit. The new arrangement would help about 5,500 MW of gas plants in southern India, particularly Andhra Pradesh and Telangana.

Centre approvessubsidy for strandedgas-based powergenerators

NEWS

HYDROCARBONSGas price pooling approved for fertiliser sectorThe Cabinet has approved pooling the prices of domestic natural gas and imported LNG used by fertiliser plants to make the cost of gas uniform and affordable with effect from April 2015. The Gas Authority of India is likely to be the pool operator.

Fertiliser plants currently consume about42.25 million metric standard cubic metres per day (mmscmd) of gas to manufacture subsidised urea. Of this, 26.50 mmscmd is domestic gas priced at USD 5.18 per mmbtu, which is about half the cost of the balance 15.75 mmscmd of imported LNG.

At present, gas supplied to fertiliser units is priced based upon the combination of domestic gas and imported LNG. This causes variations in input price, and consequently in the final production cost.

This reform is expected to augment indigenous manufacturing capacities and lead to the revival of sick fertiliser units. Over the next four years, an additional production of around 37.13 lakh MT of urea is expected from existing fertiliser units, resulting in savings of Rs 1,550 crore of subsidies.

Dutch oil behemoth Shell has agreed to buy out the British Gas (BG) Group for USD 70.2 billion. This is the first major energy merger in over a decade, closing the gap on market leader Exxon Mobil after a plunge in prices.

This is the third largest oil and gas deal ever by enterprise value and will provide Shell assets in Brazil, East Africa, Australia, Kazakhstan and Egypt, besides boosting its proven oil and gas reserves by 25 per cent. Shell expects the deal to yield pre-tax annual savings of about USD 2.5 billion.

Shell will pay for the acquisition with a mix of cash and stock. BG shareholders will receive 383 pence a share in cash and 0.4454 of Shell’s B shares for each BG share held, cumulatively owning 19 per cent of the combined firm.

Shell to buy BG for USD 70 billion

RENEWABLE ENERGYGovernment set to initiate 100 GW solar energy planThe Government is starting the process to install 100 GW solar energy capacity by 2022 through the award of 10,000 MW of projects in the next three months. Of this, about 6,000 MW will be set up by NTPC, 2,500 MW by Solar Energy Corporation of India (SECI), and around 2,500 MW by the Government of Madhya Pradesh (GoMP). The balance will be set up as solar parks in other states. India's present solar capacity is a meagre 3,382 MW.

NTPC will build 3,300 MW of own projects and tender 3,000 MW under the power bundling scheme as part of its plan to harness 25 GW of solar power in six years, of which NTPC’s share will be 10 GW. Land clearances and tenders for transmission for NTPC’s proposed solar parks at Anantpur, Andhra Pradesh (1,500 MW) and Coonoor, Tamil Nadu (1,000 MW) have been completed. Capacity will be awarded through rate-based bidding.

SECI, a fully-owned subsidiary of the Ministry of New and Renewable Energy, is set to tender 2,000 MW of projects by next month. SECI will also be a part of a JV agreement with the GoMP to develop India's first solar ultra-mega power plant at Rewa. Bids for batches of 250 MW and 500 MW will be called by May.

Tenders are also expected soon from Telangana, Tamil Nadu and Andhra Pradesh. In addition, Rajasthan is analysing a model to harness large-scale solar power in desert areas.

20 GAUGE

NEWS

RENEWABLE ENERGY Power tariff policy amendments to reviserenewable generation targets

The Ministry of Power has proposed amending the 2005 tariff policy to add the promotion of renewable generation sources as its fifth objective. The amendment seeks to raise Renewable Purchase Obligation (RPO) to 8 per cent by 2019 from the earlier target of 3 per cent by 2022, exempt renewable energy sources from inter-state transmission charges, and allow discoms to procure bundled solar power from existing conventional power generators on a cost plus basis to meet their RPOs.

The hike in RPO target implies an aggregate solar capacity of 69 GW by 2019. This means capacity growth of 87 per cent per annum, which is in line with the 100 GW by 2022 target.

Further, exempting renewable power from inter-state transmission charges would encourage growth of solar plants in resource rich states such as Rajasthan and Gujarat, if transmission capacity is hiked accordingly. Green corridors to evacuate renewable power are already being planned.

The amendments propose that all coal-fired power plants installed after a specified date be accompanied by a renewable power plant for at least 10 per cent of their coal generating capacity. Also, after receiving consent from the off-taker, existing coal power plants will be allowed to set up renewable capacity for bundled power to be sold on a cost-plus basis.

While discoms will still have the option to buy solar power by allocating capacity through competitive bidding, the amendment will enable them to also buy bundled power directly from conventional producers such as NTPC, NHPC, Reliance, Jindal and Adani.

Conventional power generators already have an obvious advantage over renewable IPPs in terms of scale and evacuation infrastructure. Now, being able to directly pass through costs for solar on a regulated cost-plus basis is likely to boost their advantage further.

While the proposed amendments are sound in terms of policy, weak enforcement and lack of cooperation from states will be the key challenges for the Government in actual implementation.

Maharashtra targets14,400 MW non-conventional powergeneration by 2019To lower carbon emissions, the Maharashtra government has decided to use non-conventional resources to generate 14,400 MW of electricity by 2019. Of this, 7,500 MW will come from solar and 5,000 MW from wind. Sugar industries will generate 1000 MW, besides 200 MW from cogeneration, 300 MW from biogas and 400 MW from industrial waste.

According to officials, a policy on this issue will be sent for Cabinet approval soon. The State Government will invite private companies to invest Rs 70,000 - 80,000 crore in the ventures, and purchase a portion of the power generated by them.

Further, to check electricity theft, feeder managers will be installed at specific places, with five feeders per location. Feeders are medium voltage lines used to distribute electricity from a sub-station to consumers or to smaller sub-station. At present the Maharashtra State Electricity Distribution Company (MSEDCL) has 17,000 feeder managers.

India Inc turnsto green bondsto fund sustainable projectsIndia is exploring multiple avenues to finance its plan to augment renewable energy capacity by 175 GW by 2022. The Government has asked select financial institutions, including public sector entities like Rural Electrification Corporation (REC), Power Finance Corporation (PFC), IDBI Bank, Indian Renewable Energy Development Agency (IREDA), and private sector entities like India Infrastructure Finance Limited, ICICI Bank and Yes Bank to raise funds through the issuance of green bonds.

YES Bank and Export Import Bank of India (EXIM Bank) have jumpstarted the green bonds market in India. In February, YES Bank raised Rs 1,000 crores (USD 160 million) against the target ofRs 500 crores through its 10-year green infrastructure bonds to fund solar, wind, biomass and small hydro projects. In March, state-owned EXIM Bank raised about Rs 3,100 crore (USD 500 million) through a 5-year green bond issue to international investors in the first such dollar-denominated offering from the country. At present, EXIM Bank’s dollar portfolio is USD 9-10 billion.

Cricket goes solar!The four decade old M Chinnaswamy Stadium at Bengaluru has become the first cricketing venue in India – and the world - to have a rooftop solar power plant. The Karnataka State Cricket Association (KSCA) installed the 400 KW rooftop plant, designed, engineered and managed by RenXSolEcotech.

The solar plant is designed to generate 5.90 lakh units per year, equivalent to powering 200 AEH (All Electric Homes) using 3 KW power annually. It will also save 600 tons of carbon dioxide emissions each year. The Bangalore Electricity Supply Company (BESCOM) Grid will buy the excess power generated at Rs 9.56 per unit under the Net Metering policy. KSCA will only pay for the net of power generated and consumed.

At the inauguration of the plant in April 2015, Karnataka Energy Minister D K Shivakumar said that the State Government would allow construction of an extra floor as an incentive for people to install solar power panels on their rooftops.

CLIMATE CHANGEBan on diesel vehiclesin Delhi suspendedThe National Green Tribunal’s ban on diesel vehicles aged over 10 years has been stayed till May 18 while the authorities work out ways to implement the Tribunal’s instructions effectively without inconveniencing the public.

Slamming the Centre, the Delhi government and other concerned authorities for not sincerely implementing pollution control initiatives like capping the number of vehicle registrations and hiking parking fees, the Tribunal recently announced strong measures to curb air pollution in Delhi. Besides banning diesel vehicles, it also banned petrol cars aged over 15 years and cracked down on illegal construction in the capital and surrounding satellite towns.

Lawyers representing the Delhi government appealed to the Tribunal for more time as it was impacting essential services such as garbage collection and transportation of eatables which were being done using old trucks.

India may submit climate change plans in SeptemberIndia is likely to submit its plans to manage climate change, including the proposed steps to curb carbon pollution, by September 2015. Given the Union Government's thrust on manufacturing, its commitment to ensure total electricity coverage by 2022, and the demands of urbanisation, ironing out India's post-2020 pledge to tackle climate change is challenging.

So far, the European Union, the United States, Switzerland, Norway and Mexico have submitted their plans to the UN Climate Change Secretariat. The deadline for submissions is September 30, after which the Secretariat will publish a report on the submissions on November 1, 2015.

22 GAUGE 23GAUGE

24 GAUGE

156,191

22,971

1,200

5,780

40,867

31,692All-India Installed Capacity Of Power Stations (MW)

Coal

Gas

Diesel

Nuclear

Hydro

Renewable Energy

DATA AS OF 31 JAN 2015

12.00

10.00

8.00

6.00

4.00

2.00

0.00

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

(March)

2.499

5.06

6.811

8.2498.922

9.73

11.63210.901 10.76

11.463

7.958

TOTAL LNG IMPORTS IN INDIA (Million Metric Tonnes)

Source: PPPAC (Reliance LNG import data not included)

STATISTICS

0.00

10.00

20.00

30.00

40.00

50.00

60.00

2004 -05 2005 -06 2006 -07 2007 -08 2008 -09 2009 -10 2010 -11 2011 -12 2012 -13 2013 -14

NATURAL GAS CONSUMPTION IN INDIA (Billion Cubic Metres)

Source: PPAC (Natural gas available for consumption after deducting gas flared from gross production by producers)

30.78 31.33 30.79 31.48 31.75

46.49

51.23

46.33

39.76

34.55

Content of oxygen in ethanol, which helps complete combustion of fuel and thus reduces harmful tailpipe emissions, making ethanol an efficient tool to combat vehicular emissions.

68 milliontonnes

Annual diesel consumption in India, of which 64 per cent is used by road transport. Petrol consumption is about 16 MT.

$143 billion

Financial burden of oil imports on Indian foreign exchange in 2013 – 2014 (Indian Petroleum & NG Stats 2013-14, MoPNG).

Rs 4000crores

Cumulative amount that may be saved in the next 10 years by including passenger cars under Fuel Efficiency Norms, saving 5,76,000 MTOE of fuel and reducing carbon emissions by 14,40,000 MT.

NUMEROLOGY

35%

This issue of enGAUGE is supported by:

1.9 tonnesIndia's carbon emissions per person per year.China produces 7.2, and the US, a whopping 16.4.

750 MWThe capacity of the world's largest solar power plant in development at Rewa, Madhya Pradesh, 35 per cent more than California’s much-hyped 550 MW Desert Sunlight solar project.

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