The dark secret behind India’s solar plan to bring power to all

News:

Like generations before him, the only light Jurdar Thingya has at night in his one-room mud hut in Maharashtra comes from a small wood fire on the floor. A broken solar panel is all that the 35-year-old farmer has to remind him of the government’s promise to bring electricity to all of India’s villages.

Bhamana, population 1,500, is two hours’ walk from the nearest surfaced road, across a river that is impassable for months during the monsoon rains. Like other remote villages, it was powered by renewable energy as part of a drive to take electricity to every community in the state, according to Dinesh Saboo, projects director at Maharashtra State Electricity Distribution Co., the power retailer.

Maharashtra, home to the financial capital of Mumbai, declared itself fully electrified in 2012, relying on solar panels or small wind turbines to cover remote areas. India considers a village electrified if at least 10% of the households and public places such as schools have electricity.

But theft and damage have plunged 288 villages and 1,500 hamlets in Maharashtra back into darkness, according to Saboo. “Most of the equipment is either stolen or not working,” he said. “Now we have decided that a majority of these villages will be electrified in the conventional way.”

In India, political power and electrical power are closely linked. Prime Minister Narendra Modi’s ruling Bharatiya Janata Party, which also runs the state government of Maharashtra, was elected in 2014 partly on promises to bring electricity to rural voters. It has pledged to electrify all villages by May 2018 and supply power to every citizen by 2019.

“Rural electrification is one of the most critical issues on which the elections in India are being contested,” said Sandeep Shastri, a political commentator who teaches at Jain University in Bengaluru. “People will weigh the promises of the governments—both federal and state—on the basis of implementation. Their electoral gains will be determined by the credibility of their promises.”

Shastri said rural electrification contributed to the landslide win last week of Modi’s party in Uttar Pradesh, one of India’s least-developed states, where voters compared the federal government’s efforts with the lack of progress from the incumbent state government.

Power surge

There are a lot of votes to be won. In 2014, the World Bank ranked India as home to the world’s largest unelectrified population. Power was either unaffordable, inadequate or non-existent for 240 million people, according to data from the International Energy Agency. An expanding economy and population put the country on track to be the biggest driver of global energy demand through 2040, according to the Paris-based International Energy Agency.

But progress has been patchy. The government has met 77% of its target to link villages to power grids, yet only about 14% for villages earmarked for off-grid power like solar. Some 47 million rural households are still without electricity, and even those connected to the grid suffer frequent outages.

Federal renewable energy secretary Rajeev Kapoor didn’t immediately respond to calls and a text message seeking comments.

In 2012, the nation suffered one of the worst blackouts in history when the national grid collapsed, cutting power for two days to almost half the nation’s population. About one in five Indians lacked access to electricity, compared with full electrification in China, the International Energy Agency said in a 2016 report.

When the first solar units were installed in Bhamana in 2010, most houses got a small photovoltaic panel connected to a battery that could power a light for five to six hours. Seven years later, only four or five houses still have working lamps.

Dead battery
“We have no clue how to fix the equipment,” said Achildar Pesra Pawra, a member of the Bhamana village council. “Some batteries stopped working within months. Others lasted for about two years. Some of the solar panels were broken.”

Part of the problem is that the factors that make solar attractive for isolated communities—ease of transport and installation—also make them easy to steal, said Shantanu Jaiswal, an analyst at Bloomberg New Energy Finance.

India plans to expand renewable generation capacity more than three-fold to 175 gigawatts by 2022, with the majority from solar. Almost a quarter of the total will be supplied by rooftop panels.

“The instances of theft and destruction of distributed renewable energy appliances has been very prevalent in programs especially run by aid agencies as part of corporate social responsibility or where the government provides a subsidy,” said Jarnail Singh, India director at The Climate Group, a London-based organization promoting low-carbon solutions. “This is because there is no maintenance of equipment after installation.”

Maoist guerrillas
As a result, Maharashtra’s state-owned power retailer is now planning to spend Rs3.85 billion by 2018 to connect many of the isolated villages to the grid.

That won’t be easy. Most of the 288 villages that no longer qualify to be called electrified are in mountainous and thickly forested areas. That means getting approval from the forest department to run transmission lines across the land. And in some cases it means finding contractors willing to venture into areas populated with Maoist insurgents.

“We are not able to enter some of these areas,” Saboo said. “Many contractors are not prepared to work there and those that are charge very high rates. We are already allowing the highest rates in these areas so that they can get electrified.”

For villagers like Thingya, one of the greatest losses from the failure of the solar project is at the village primary school, which was able to light its cavernous classroom even in the dark monsoon days. Now his six children learn in the open air in the dry months and don’t have light to read or study at home.

My View:

The issues related to solar power will exist if the proper maintenance is not carried out. Theft of panels,damage to panels etc. will be there if proper maintenance is not available. Government should concentrate on maintenance part so that the supply from solar panel  becomes more reliable. 

NTPC threatens cutting off Delhi’s power supply

News:

State-owned power generator NTPC Ltd has threatened to cut off the national capital’s power supply over alleged non-payment of dues by Anil Dhirubhai Ambani Group (ADAG)-owned power distribution companies BSES Rajdhani (BRPL) and BSES Yamuna (BYPL).

“In case, overdue payments are not immediately forthcoming, NTPC may be constrained to consider all options, including regulation of power supply, in the coming period,” the country’s largest electricity producer said. It added continued non-payments by Delhi Discoms would make it very difficult for NTPC to keep maintaining its reliable supplies in the ensuing peak summer season where the demand of Delhi is supposed to peak at 6,600 Megawatt as per DISCOM estimates.

When asked for comment, a BSES spokesperson said the two discoms are under huge financial stress due to non-liquidation of regulatory assets which are over Rs 16,000 crore as on March 2016. As compared to this, total overdues payable by BYPL to APCPL (a Joint Venture of NTPC, Delhi government and Haryana) is around Rs 239 crore, and this power is already being regulated for the last few months.

“BSES discoms are in regular touch with APCPL to get the regulation lifted, as also making concerted efforts to address the situation and clear pending dues in a just and equitable manner,” the BSES spokesperson said.

He added the payment of dues to power utilities by BSES discoms is sub judice in the Supreme Court and the judgement in the matter is reserved since February 2015. “We are awaiting the Supreme Court judgement, which will clear the path for recovery or liquidation of regulatory assets. Consumers will continue to get reliable power supply,” he said.

NTPC is the major supplier of power to the National Capital Territory (NCT) of Delhi which has a total allocation of 3,930 Mw from NTPC including 693 Mw from APCPL Jhajjar . Of this allocation, more than 2,000 Mw is allocated to the two BSES Discoms. NTPC supplies electricity worth around Rs 300 Crore to the BSES discoms every month.

As per the terms of the Power Purchase Agreement (PPA) between NTPC and BSES discoms, the payments of energy bills are to be made within a calendar month. NTPC, however, alleges the two discoms (particularly BYPL) are not making these payments as per the agreed provisions of the Power Purchase Agreement.

“It may be recalled that for a similar situation, NTPC had issued a notice for regulation of power to these discoms in May 2016. Subsequently, after discussions with the discoms and assurance of liquidation of outstanding dues by this financial year, NTPC had kept this regulation notice in abeyance. However, despite a lapse of almost 10 months, there is an outstanding amount of Rs 239 crore overdue for payment from BYPL,” NTPC said.

The company claims that fuel alone accounts for around 70 per cent of its generation cost and that has already been paid to fuel suppliers like Coal India (CIL). NTPC had issued a similar threat in May last year saying it would have to suspend supplies for the BSES discoms if they fail to cough up Rs 1,300 dues. The generator had then issued notices to the discoms on non-payment of dues.

My View:

Most of the Private DISCOM's situation in India is in dismal state. In this case according to PPA the payment must be settled within a month,but due to financial problem of BSES they are not able to pay the dues. Companies like BSES should analyse first the situation then they should finalize the power purchase agreement with any Generators.

States free to give coal to efficient private power producers

News:


The power ministry on Tuesday framed rules giving state governments the freedom to get power generated by the most efficient private companies in the state using the coal allocated to states by miners under a new system that replaces the earlier rigid allocation of coal to individual state-owned plants.

The rules framed in line with the cabinet decision of 4 May last year rationalising coal allocation, to allow states to invite power tariff bids from independent power producers at which they are willing to sell power using the coal that the state is willing to assign to them.

The landed cost of power from the private generation company including transmission charges has to be less than the variable generation cost of power from the state power generation unit, which the private player is seeking to replace, according to the rules released by the power ministry. Power tariff has two components—a fixed cost of the power plant and the variable or the energy cost.

The private power producer has to assess transmission infrastructure availability before making the bid. The state will check with the ministry of railways before assigning coal to the winning bidder whether transportation of the fuel to the private player’s plant was feasible.

The easing of the coal allocation rules is part of the government’s efforts to reduce power generation cost by utilising the fuel at the most efficient plant and enable distribution companies to buy more power.

On 21 December, coal and power minister Piyush Goyal had said that he had cleared the plan to allow state-owned and private companies to swap their allocations of coal so that power plants can source the fuel from the closest available location and improve power generation efficiency. The minister had also said then that eventually he would like such swap of coal to be allowed across sectors of the industry such as power, steel or cement.




My View:


The initiative by Government is quite good which will help to reduce the cost of electricity. But to come under the policy the rules are quite tough as stated in news. There should be some flexibility to private generation companies. 

35 open access companies return to Maharashtra power discom's fold

News:

Altogether 35 firms drawing power for their units have decided to become consumers of the Maharashtra State Electricity Distribution Company Limited (MSEDCL) again.

The 35 companies were among 130 firms in the Konkan region of the state power utility and had been buying power from private producers as part of the open access system introduced last year.

These consumers are known for prompt and huge payments, as they buy power in bulk. The companies had opted for the open access system. It allows the firms to buy power from independent producers located anywhere by paying some duty and the wheeling (carrying) charges to the electricity company.

What came as a boon for MSEDCL is that the state energy regulator, Maharashtra Energy Regulatory Commission (MERC), in November 2016 tariff order allowed it to increase the wheeling charges and duty for consumers buying power from other producers, which use its network to supply to its consumers.

"The result was that the electricity tariff of consumers buying power from private players became costlier. This is the reason why some of these companies have decided to return to us," a senior MSEDCL official told TOI.

The officer added out that the tariff provided to them by the independent producers was lower than that of MSEDCL. But the new conditions mean that the companies have to cough up more as power tariff.

"Had the regulator's ruling not come, these firms would not have approched the MSEDCL for power supply," said Siddharth Soni, a consumer representative from Nashik.

MSEDCL officials are, understandably, happy with the development. "We are reaching out to the companies promising best services. As a result, we are gaining back their confidence. The tariff and other conditions are favourable no doubt, but the company has also improved its services and infrastructure over a period of time," MSEDCL regional director Satish Karpe said.

My View:

Such orders will reduce the competition from the market. There are many pvt players which will get affected by such orders. Many power trading companies will  get affected as there consumers will be moving towards DISCOM's. Government should take necessary steps otherwise it will ruin the open access market in Maharashtra.

Panama Energy Sector – Overview Of Incentives

Panama is one of the the fastest growing and most dynamic economy in Latin America, with GDP growth of 6.0 percent in 2015 and estimated 6.3 percent in 2016. All of this growth has become a challenge for the energy sector by demanding more electricity and new energy sources.

Panama has traditionally relied mainly on hydroelectric production to meet its energy needs. However, during the last few years it has sought to change its energy mix due to the effect of climate change on its water reservoirs. Today, Panama's energy matrix is composed of hydropower (56.6%), thermal/oil (41.34%) and other sources (2.06%) including wind and solar.

Panama expects that its energy demand will grow at an average rate of 6% until 2030 according to a proposed 2016-30 expansion plan by state power transmission company Etesa. The plan projects that annual electricity use and load demand will grow around 6%, spurred by expansion of the likes of the Panama Canal, new airport operations and new potable water and sewerage system. Forecast demand scenarios include exchange with Central America power grid Siepac and a planned interconnection with Colombia helping position Panama as an energy hub for the Central American region.

In March 2016, the Panamanian government approved the National Energy Plan 2015-2050. This new plan proposes that by 2050, 70% of the energy matrix coming from renewal energy with emphasis in solar and wind power.

Currently, there is a planned investment of:
Construction of the 4th Transmission line with capacity of 1,280 (MW) by circuit of 500 KV with a length of 330 km.
Incorporation of liquefied Natural Gas (LNG) energy generation plants.
The Colombia-Panama interconnection line through an underwater cable with capacity of 400 megawatts ( MW ).
Construction of the large Changuinola Dam II
Update and expansion of transmission and distribution network.

As part of Panama's strategy to diversify the country's energy matrix, in 2011, 2012 and 2013, the Panamanian Government enacted various statutes that set forth tax and other incentives for renewable sources of energy, such as wind-based, biomass, natural gas-based and solar-based power generation facilities.

An excerpt of the tax benefits that applies to each of type of energy source follows:

Gas Based Power Generation Facilities

• Tax credit applicable to the income tax of a maximum of 5% of the total direct investment value for civil works that become infrastructure for public domain, like highways, road, bridges, sewage systems, schools, health centers and other of similar nature, previous to an evaluation by the Public Entity that receives the corresponding work, in coordination with the Ministry of Economy and Finance. The referred credit cannot be subject of compensation, cession or transfer.
• Exoneration of customs duties that could be caused due to the importation of equipment, machinery, materials, spare parts and others necessary for the construction, operation and maintenance of the plants.
• Right to use an accelerated amortization method to depreciate fixed assets.
• The exemption of all national taxes, for a period of 20 years, for companies dedicated to the manufacturing of natural gas generation equipment within Panama. Equipment includes mechanical, electronic, electromechanical, metallurgical and electrical type of equipment.

Wind Based Power Generation Facilities

• Tax credit applicable to the income tax of a maximum of 5% of the total direct investment value for civil works that become infrastructure for public domain, like highways, road, bridges, sewage systems, schools, health centers and other of similar nature, previous to an evaluation by the Public Entity that receives the corresponding work, in coordination with the Ministry of Economy and Finance. The referred credit cannot be subject of compensation, cession or transfer.
• Exemption of all taxes pertaining to the importation (which includes customs duties, introductions fees and VAT) of equipment and materials for the construction, operation and maintenance of wind powered generation plans. The exemption applies also to any natural or legal persons who import equipment for the construction, operation and maintenance of wind-powered generation plants with the purpose of promoting and selling this type of equipment.
• The application of the accelerated depreciation method for equipment used for wind-powered generation.
• The exemption of all national taxes, for a period of 15 years, for companies dedicated to the manufacturing and installation of wind-powered generation equipment within Panama.

Biomass Power Generation Facilities (Applicable for a period of 10 years) 

• Full income tax exemption.
• Payment exemption of commercial or industrial license tax.
• Exemption on taxes, fees, contributions or any other municipal charges.
• Exemption from VAT on importation.
• Full exemption of custom duties, applicable to equipment and materials used for the development of the power generation project

Solar-Based Power Generation Facilities

• Tax credit applicable to the income tax of a maximum of 5% of the total direct investment value for civil works that become infrastructure for public domain, like highways, road, bridges, sewage systems, schools, health centres and other of similar nature, previous to an evaluation by the Public Entity that receives the corresponding work, in coordination with the Ministry of Economy and Finance. The referred credit cannot be subject of compensation, cession or transfer.
• Exemption of all taxes pertaining to the importation (which includes customs duties, introductions fees and VAT for specific items) of equipment and materials for the construction, operation and maintenance of solar-based generation plans.The application of the accelerated amortisation method to depreciate fixed assets.

In addition to the tax incentives previously mentioned, there are additional tax benefits that applies to other renewable power projects, such as mini and small hydro generation facilities.