Turkey rolls out red carpet for Indian power producers

Mumbai: With Turkey aiming for mega 125-GW installed power capacity by 2023, private firms like Tata Power, Lanco, GMR and Essar as also state-run NTPC are mulling investments in that nation, according to Turkish investment support and promotion agency.

As of 2012, the installed capacity in Turkey, which is a European Union member despite being an Asian country, was 57,058 MW. It plans to increase the capacity to 1,25,000 MW by 2023 and is expecting domestic companies to contribute significantly in achieving the target.

"There is immense scope in the power sector in Turkey, which is emerging as an investment hub especially in the power sector. Countries like Russia, Austria, China, France, Sweden, Germany and even the US are investing heavily in Turkey now.

"India, which has so far no presence there is now seriously considering Turkey as an investment destination," Sanjeev Kathpalia, senior advisor with the Investment Support and Promotion Agency, under the office of the Turkish prime minister, told PTI in an interaction here.

He said so far India has no presence in his country, but now many private and public sector firms are keenly looking at investing in Turkey.

"Companies like Tata Power, Lanco, GMR, Essar, Reliance in the private sector and NTPC in the public sector are keen to invest. We are in talks with these companies and we may see some positive activity in this direction in the next six months," Kathpalia said.

An investment of nearly USD 100 billion is expected to come in the sector in the next 10 years and India is expected to contribute nearly 15 per cent of the total investment.

He further said apart from the scope Turkey offers in the power generation sector, its geographical position makes it a transit country in the field of energy.

"Turkey's geographical position to the regions of Europe, the Balkans, the Aegean, the Black Sea, the Caucus-Khazar Basin, Central Asia, the East Mediterranean Sea and the Middle East makes it an energy corridor for transporting power resources from the Middle East and the Khazar regions to Europe," Kathpalia said.

He further said his country's strategic position is also critical for export and import of electricity through Turkey enabled energy integration with Europe.

"Indian companies can sell power generated in Turkey on merchant tariff basis outside. Besides, Turkey also offers various incentives to developers who use locally sourced equipment," Kathpalia added.

Next-Gen power distribution era to emerge with new Electricity Act

The amendment to the Electricity Act is likely to change the business dynamics for the power distribution companies. Touted as the next generation reforms in the power sector, it would not only give the choice of supplier in the hands of small consumers but also allow discoms to procure power from their own renewable energy plants to meetRenewable Purchase Obligation (RPO).

The Union Cabinet on Wednesday cleared the changes in the Act. Union power minister Piyush Goyal earlier this week said the Bill for amendment would be tabled in Parliament next week.

Aimed at creating a competitive market for retail buyers, open access would now allow consumers of less than 1 mw to choose their supplier. Under the Electricity Act 2003, consumers with more than 1 mw demand can change their distribution company.

Besides, power generators, too, would be allowed to sell surplus power outside a state. “Opening up the sector would make sure that the supply of power is in line with the market realities,” said an executive in one of the distribution companies. Currently, state governments can appeal to the regulator to stop such a sale in "extraordinary circumstances".

Distribution companies in other states are unable to freely procure such power. "We end up scheduling costly power which has pushed us to the wall. Banks have also withdrawn any support from the discoms,” said a senior executive of Delhi-based private power distribution utility. The distribution industry owes Rs 13,000 crore as dues to the generators.

A major breather for the distribution sector is also the separation of content and carriage business. This entails that building infrastructure for power supply and the supply of power would be two different business entities. Besides, any power supplier could use the infrastructure.

The Bill has also an important insertion imposing ‘duty to connect, supply to request’, wherein last-mile supply would be done keeping in mind the economics and viability. “In most of the developed markets, the carriage business is controlled by the regulator and content i.e. power supply is market driven within a price band,” said the executive. With separate business, the onus of the development of the network would rest with the carriage provider.

Discoms from across the country have written to the ministry of power seeking clear demarcation of duties and responsibilities for content and carriage.

The cash crunched discoms have always cited their financially stressed state as the reason for not complying with the renewable purchase obligation (RPO), have now been asked to generate renewable power to meet their targets. The Act proposes a National Renewable Energy Policy and a new ‘Renewable Generation Obligation (RGO)’.

A discom head said that the sentiment among the Indian consumer is that power should be cheap. “All consumers think they are burdened with costly power whereas the discoms struggle with recovering their cost. In a situation like this, unbundled distribution sector helps all,” said the executive.

Power tariff not to rise with law on coal auctions: Goyal

The new law on coal block allocation will not lead to higher electricity tariff for consumers, Power and Coal Minister Piyush Goyal assured the Lok Sabha Friday, following which the lower house passed the Coal Mines (Special Provisions) Bill, 2014, which sets the norms for the auction of 204 mining blocks cancelled by the Supreme Court in September.

The bill, which seeks to replace an earlier ordinance issued in the wake of the apex court order, was introduced by Power Minister Piyush Goyal two days ago, with opposition members charging during the debate that it was seeking to de-nationalise the coal sector by reversing a decision of the 1970s.

"Power tariff will not go up. Power sector is a regulated sector. Reverse bidding auction will happen, prices will fall," he said replying to a debate on the bill.

The minister said the step was taken primarily to address the requirement of the Supreme Court and to avoid a major crisis in electricity generation in the country due to a shortage of coal, and to protect the interests of millions of workers.

"After e-auction of coal is introduced, it will bring down electricity prices. It will give more power purchasing capacity to the consumers," he said.

Opposition members, notably Jyotiraditya Scindia of the Congress -- a former union power minister himself -- and Kalyan Banerjee of the Trinamool Congress, wanted the bill to be sent to the relevant standing committee of the parliament for proper scrutiny.

Both members said neither the ordinance issued by the government nor the passage of the bill to replace it were required to auction 74 of the coal blocks that were ordered by the top court to be cancelled. These are now proposed to be re-auctioned or allocated in the first phase.

"This is a wonderful opportunity to recast the coal sector. It is being wasted," said Scindia, calling for the restructuring of the state-run Coal India, which accounts for around 80 percent of India's production.

But Goyal countered saying the bill aims to rationalise and set the proper norms in place for mining operations, consumption and sale of coal in the country.

"We have to fulfill the end-users requirements first. We have to think about the people who buy coal for domestic use for a high cost. We have to bring down the prices," he said.

Coal Secretary Anil Swarup had told reporters here last week that the bidding process for what he termed will be a historic auction of coal blocks would get underway Dec 22, with the release of tender documents.

The central government will auction or allot 18 more coal blocks with a total capacity of about 120 million tonnes, in addition to the 74 blocks already in the first lot, to meet the growing needs of the power sector.

"When we analysed the number of coal blocks for auction, we discovered that sufficient number of coal blocks weren't available for the power sector. Hence we scouted for more, which are better in terms of readiness. So those 18 blocks have also been included."

Of the 92 mines to be allotted and auctioned in the first lot, 57 would be given to the power sector, and the remaining would be for other industries like steel and cement. Further, out of 57 blocks for the power sector, 23 will be considered for the states.

‘Solar power may compete with coal-generated power soon’

Solar power will become an attractive option for consumers to buy after five years due to reduction in prices provided the government offers adequate fiscal incentives and streamlines policies relating to the the electricity market, says Tobias F Engelmeier, managing director, Bridge to India, a consultancy that provides market intelligence and other services to solar sector companies.

Since the launch of the national solar mission in 2010, generation costs for solar projects have fallen 60% to 6.5-7 a unit.

If this rate of price drop continues, solar power may soon compete with coal-generated power, which costs R5-6 a unit.

Encouraged by the dramatic fall in solar generation costs, the Centre has scaled up its initial solar generation target of 20 GW by 2022 to 100 GW, prompting global players to raise their bets on the Indian solar market. As of now, India has installed 3,000 MW solar generation capacity.



Of the 100 gw capacity addition envisaged by 2022, first 60 gw will be added through large-sized projects, of 200-1,000 MW each, over the next five years. After that, 40 GW capacity will be added with the help of smaller ( in kilowatt size), distribution generation projects.

Engelmeier told FE: “While the large projects, which are expected to help in reducing generation costs for the industry, will need fiscal incentives, electricity from smaller projects that are envisaged to come later will be competitive in the market without any subsidy.”

According to him, land acquisition,transmission and financing are the three key problematic areas for the solar power sector where the government needs to look into.

Engelmeier said that the government’s decision of not imposing dumping duty on solar equipment has added to the positive sentiments.

For power, 2014 is the best of times, the worst of times

Fossil-based generation peaked in 2013 and will decline from now on

The power sector is changing the world, but not enough to keep the world unchanged.
The studies confirm that we have enough economically viable technology, and still enough time, to solve some of the world’s most serious problems. However, time is running out if we continue our subsidised self-destruction for much longer, while denying 1.3 billion of our fellow citizens access to electricity and 2.7 billion people access to clean cooking equipment.
We have the means and solutions to act but we fail to apply them. Therefore, the next generation may look back on 2014 and conclude that it was the best of times, it was the worst of times.
For electricity, times are good and will become better, the reports agree. It is the fastest growing energy source and it will continue to be for the coming decades. The future looks particularly good for renewables, not least for PV and wind power. Fossil fuel-based electricity peaked in 2013 and will continue its decline.
“The power sector is undergoing one of the most profound transformations since its birth in the late 19th century,” according to IEA’s World Energy Outlook.
“Renewables are expected to go from strength to strength, and it is incredible that we can now see a point where they become the world’s number one source of electricity generation,” IEA executive director Maria van der Hoeven says.
“It is no longer a matter of whether but of when a systematic switch to renewable energy takes place,” IRENA director general, Adnan Amin, writes in his foreword to IRENA’s REthinking Energy.
Total investment in (non-large hydro) renewable electricity has increased from $55bn in 2004 to $214bn in 2013. PV made up 24% of total global investments in new capacity, hydro accounted for 20% and wind power 15%. 19% of investments went to coal and 12% to gas last year, according to World Energy Outlook. Around 70% of global investments went to non-hydro renewables in the OECD. In the non-OECD countries, the share was 27%.
Wind turbine costs are down 30% since 2008 and onshore wind electricity cost has fallen by 18% since 2009, “making it the cheapest source of new electricity in a wide and growing range of markets,” according to REthinking Energy, which concludes that “renewable energy is often competitive with fossil fuel power at utility scale, and is generally cheaper in decentralised settings”.
While the recent performance of renewable electricity is remarkable, power generation as a whole has not become cleaner. Today, electricity accounts for more than 40% of man-made CO2 emissions. REthinking Energy points out that the average emissions intensity has only been marginally improved in the past 20 years – from 586 g/kWh in 1990 to 565 g/kWh in 2010.
This will change, but not enough unless we act. Emission intensity reaches 498 g/kWh by 2030 if current policies and plans are carried out – a reduction of 12% compared to now, says IRENA.
However, a doubling of the share of renewables compared to today, coupled with energy efficiency measures, could reduce intensity by 40% to 349 g/kWh in 2030, enough to avert disastrous climate change. More importantly, “the good news is that the technology is sufficiently mature, and the economics sufficiently favourable, that the solution is entirely within countries’ grasp,” according to REthinking Energy.
The world already produced twice as much renewable electricity (4,808 TWh) as nuclear power (2,461 TWh) in 2012. Looking ahead, renewable electricity production triples between now and 2040, increasing more than coal and gas combined.
Renewable energy capacity additions exceed those of fossil fuel and nuclear, combined – both in terms of net and gross additions. Already this year, the world will produce more renewable power than gas-generated electricity and by the 2035 renewables will replace coal as the world’s largest power source, says the IEA.
A staggering $12 trillion will be invested in new power plants between 2014 and 2040. Renewables will account for $7.4 trillion (61%), $3.2 trillion will be invested in fossil fuel and $1.5 trillion in nuclear power plants. The dominance of renewables is quite remarkable, given that this is a ‘business-as-usual’ scenario.
While renewables in general, and PV and wind power in particular, are clearly now established and have bright futures, the same cannot be said about the condition of our globe and many of its inhabitants, unless progress is accelerated soon.
Even with the projected dramatic changes, the transformation of our rigid energy system is simply happening too slowly, IRENA’s analysis shows.
Enforcing current national plans only result in an increase in the share of renewable energy from 18% in 2010 to 21% in 2030. A doubling to 36% (including 44% renewable electricity) is needed to keep global warming below 2 degree Celsius. “While impressive, business-as-usual renewables expansion will deliver neither the economic nor environmental outcomes needed for sustainable development,” says IRENA.
Despite improved carbon intensities, actual emissions from the power sector will be 16% higher in 2040 than today and total emissions will increase by 20%, consistent with a global temperature rise of 3.6 °C, according to the World Energy Outlook.
Cumulatively, we have emitted about 500 Gt of carbon. If we want to stay on the good side of 2°C, we cannot emit more than another 1,000 Gt from 2014 and onwards. On current trends, the world will exceed that budget in 2040, according to the World Energy Outlook.
The dramatic changes we will see in the world’s power markets will not be enough to keep climate change under control, to avoid massive degradation of the Earth’s environment or to meet the world’s development and energy access goals.
The two reports tell a tale of a strange species. We know that CO2 is bad for our planet, our environment and our health, and we choose to subsidise its use. We know that we can provide access to basic electricity and clean cooking for all and thereby save millions of lives annually by investing an average of $60bn per year. We choose not to, and spend $550bn on subsidising fossil fuels instead – each year.
We have discovered a great natural product – hydrocarbons – which we will need forever to produce essential high value-added products such as detergents, fertilizers, medicines, paints, plastics, synthetic fibres, and rubber.
Still, we choose to waste them in inefficient power plants that make two thirds of their energy content vanish into thin, but gradually warmer, air. And we choose to waste most of those scarce hydrocarbons in combustion engines that only return a fraction of their energy content in the form of usable energy, despite having developed, decades ago, electric engines that are 2-3 times more efficient.
Charles Dickens wrote his opening sentence to A Tale of Two Cities in 1859:
It was the best of times, it was the worst of times; it was the age of wisdom, it was the age of foolishness; it was the epoch of belief, it was the epoch of incredulity; it was the season of Light it was the season of Darkness; it was the spring of hope, it was the winter of despair; we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way.
Judge for yourself, to which extent these words apply to our world of 2014.