ENERGY DIGEST

[A WEEKLY NEWS ANALYSIS]

[17 JUNE- 23 JUNE 2013]

ENERGYREVIEW.IN

Energy Digest
Power & Coal
SCCL has its hands full for the time Power bidding norms to be changed Australia to do away with coal Southern states concentrating on ensuring power supply for key services by August Delay in allocation of gas causes Rs. 40,000 crore blockage

Oil & Gas

Oil subsidy math goes for a haywire Natural gas price may hike up ONGCs subsidy bill may rise 22% this year Cap on subsidized cylinders causes reduction in LPG usage in the country Niko increases proved reserves by 160%

Renewable Energy
Renewable energy attractiveness index slipping in the country Tata Solar plans on over $1 Billion Opportunity in India Solar Bill that could add 2.2GW by 2023 New Clean Energy Test Centre in US Latin America and the Caribbean brimming with Renewables: Might be an investment opportunity

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Power and Coal

SCCL has its hands full for the time
India's second biggest coal producer Singareni Collieries Co. Ltd. (SCCL) will invest Rs.10,360 crore over the 12th Plan period (2012-17) to enhance production, open new mines and build a 1,200 megawatt (MW) coal-based power plant in Andhra Pradesh's Adilabad district. Singareni Collieries is jointly owned by the Andhra Pradesh and the Union governments, with the state holding a controlling stake of 51%. Spread across 612.21 km over Adilabad, Karimnagar, Khammam and Warangal districts in the Godavari Valley Coalfield in Andhra Pradesh, Singareni Collieries holds estimated reserves of 9877.68 mt. Of the total investment, SCCL will spend Rs.5,276 crore to expand its core mining business. This will include opening nine mines, of which three are underground mines with a combined capacity of 3.47 million tonnes per annum (mtpa); the rest are opencast mines with 12.60 mtpa combined capacity. These mines will replace nine ageing mines that are expected to be shut by end of 2017 as their reserves get depleted. Increase in production cost is a key concern for Singareni Collieries, analysts say. "Our operational cost structure is quite high because of higher stripping ratio," said Bhattacharya, a senior bureaucrat in the Andhra Pradesh government who took over charge of Singareni Collieries in May last year from S. Narsing Rao, now the chairman of Coal India Ltd. SCCL's average cost of production at Rs.1,850 per tonne is 76% higher than that of Coal India's, largely due to deeper deposits that require costlier underground mining methods and higher overburden removal at its opencast mines. SCCL produces 22% of its coal from underground mining, while Coal India produces just 8% of its coal through this method. "There is a concern of increase in cost, though the (coal) prices meet the cost at the moment, but there is pressure on the system," Bhattacharya said. "The thrust of the company is to improve profit-turnover ratio." Singareni Collieries supplies most of its coal to the state-owned Andhra Pradesh Generation Corp. Ltd (APGENCO) and NTPC Ltd; it sells the rest to cement, steel, pharma, ferro alloys and other industries at spot prices. Its price of coal ranges from Rs. 420 - Rs. 3,896 a tonne for 17 grades of coal. It is also heard that Singareni Collieries, which makes its bread and butter through coal mining, wants to diversify its basket by entering allied areas like power production, contract mining and consulting services. The state-owned mining company is setting up a 1,200 MW power project in Adilabad district in the vicinity of its Srirampur area mines at an estimated cost of Rs. 6,500 crore. The first unit of 600 MW is expected to go into production in mid-2015, followed 2 Copyright 2012-13, Energy Review Top

by the commissioning of second unit in the later half of that year. "We will be investing around Rs. 2,000 as our equity from internal accruals," Bhattacharya said. With SCCLs plans to enhance production, open new mines and build a 1,200 megawatt (MW) coal-based power plant the company seems to be extremely busy in the coming future.

Power bidding norms to be changed

Amid electricity producers facing issues with fuel price volatility, government is looking to ensure necessary "risk mitigation" measures are in place for upcoming projects where location and fuel are already decided. The Power Ministry has finalised the changes to Case II competitive bidding norms for new projects. In Case II, the location of the project and fuel to be used are already decided before start of competitive bidding. The revised guidelines would be in place once it is approved by the Empowered Group of Ministers (EGoM) headed by Defence Minister A.K. Antony. "We will focus on risk allocation and risk mitigation measures (in revised Case II bidding norms)... In the new bidding norms, we will try to balance risks faced by power producers and power procurers," a Power Ministry official said. The official did not elaborate on whether higher fuel costs would be made pass through to the consumers. With significant volatility in fuel prices, especially in imported coal costs, many power generators are adversely impacted since they don't have the option to pass through the higher costs to end consumers. Indian power sector, which is projected to see a capacity addition of about 88,000 MW in the current Five Year Plan (2012-17), is grappling with multiple woes including fuel scarcity, environmental hurdles and weak financials of distribution companies. Meanwhile, for upcoming projects to be awarded through Case I route -- where developers have the choice to decide on location, fuel and technology to be used for the plant -- higher fuel costs is expected to made pass through. Experience has shown that it might not be feasible for power producers to have stable fuel costs for the entire period of the project, experts said. In the context of Case I norms, a Power Ministry official had said that fuel costs cannot be made a basis for bidding and it has to be pass through to the procurers. "Once made pass through, there should be certain efficiency parameters and safeguards are in place to ensure balance between the interests of power producers and procurers," the official had said recently.

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Australia to do away with coal

Australia is belatedly noticing the implications of the carbon budget, although the concept has been around for years. It simply says that if the increase in global temperature resulting from human carbon emissions is to be contained to a level which will prevent dangerous climate change, the world, henceforth, can only afford to emit a limited amount of greenhouse gases. According to the latest science, that limit will be exceeded if we burn more than 20% of the world's proven coal, oil and gas reserves. At current emission rates, the world budget runs out in 20 years, and the Australian budget, as one of the highest per capita carbon emitters, runs out in five years. The carbon budget is the basis for current campaigns, led by organizations such as Greenpeace and Bill McKibben's 350.org, to ensure that budget is not exceeded, in part by stopping the expansion of Australian coal exports. Recently, the CEO of the Australian Coal Association, Dr Nikki Willliams, hit out at such "eco-activists" who are "ideologically driven to destroy Australia's coal industry but have no technically and commercially reliable and affordable solution to global climate change," going on to justify the continued expansion of the industry. Activists play a vital role in alerting society to critical issues which the establishment may wish to deliberately avoid. But in addition to activists, many more Australians are concerned about the need for serious action to address climate change. Thus the mining industry's arguments warrant a wide response. Any balanced risk assessment of the latest climate science and the evidence of warming around the world, would accept that events are accelerating far faster than anticipated. There is now a high risk that our inaction today is locking in catastrophic outcomes; the challenge is far greater and more urgent than is acknowledged officially. Evidence of climate change and accelerating extreme weather suggests that the world is close to passing climatic tipping points in the Arctic, the Antarctic and elsewhere. Dr Williams facetiously dismissed such concerns: "--- the last time I (looked), the Arctic was still there --- ". She might have added that the Arctic is warming 3-4 times faster than the global average and that 80 per cent of the Arctic sea ice volume in summer has been lost since 1979, half of it in the last seven years. On current trends, the Arctic will probably be sea ice-free in summer by 2015 and in winter by 2030. The Greenland ice sheet melt appears to be accelerating exponentially, which if confirmed, may lead to a five metre sea level increase this century. Current climate policies, including our own Clean Energy Future package, if fully implemented, will result in 4-6 degrees Celsius mean warming relative to 4 Copyright 2012-13, Energy Review

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pre-industrial conditions, with the Arctic experiencing 9-12 degrees Celsius regional warming - way beyond the official target of 2 degrees Celsius worsening an already very dangerous situation. This would result in a world of one billion people, not the present seven billion, as death and destruction ensue from a combination of heat stress, escalating extreme weather disasters, sea level rise, disease, food and water scarcity with consequent social disorder and conflict. Australia will be severely affected, probably with major population decline, unless emission reductions are accelerated. Yet notwithstanding the 20 per cent limit on burning the world's proven fossil-fuel reserves if catastrophic climate change is to be avoided, by 2025, the Australian coal industry is planning to more than double coal exports, and the gas industry to quadruple gas exports, which will make us one of the top five global emitters, exports included.

Southern states concentrating on ensuring power supply for key services by August
All the southern states are expected to implement by August the islanding schemes that would ensure power supplies to essential services in the event of grid disturbances. The idea of islanding scheme gained prominence after the massive failure of electricity grids last July that affected more than half of country's population. According to latest update from the Central Energy Association (CEA), the planning body for the power sector, the four Southern states Andhra Pradesh, Tamil Nadu, Karnataka and Kerala - would have islanding scheme by August 2013. As of now, six islanding schemes have been envisaged for the South. These schemes also come at a time when the government is making efforts to connect the Southern grid with the National Grid. In the South, the biggest islanding scheme - having a capacity of 18,545 MW would ensure essential power supplies to major cities in the four states. It would cover Andhra Pradesh, Karnataka, Chennai and Hosur (Tamil Nadu), and North Kerala. Another scheme of 7,380 MW would cover the rest of Tamil Nadu and Kerala. Islanding schemes are already in place in many parts of the country including Maharashtra. The enquiry panel that looked into the reasons for the collapse of power grids last year had suggested the creation of electricity islands. "Efforts should be made to design islanding scheme based on frequency sensing relays so that in case of imminent grid failure, electrical islands can be formed."These electrical islands can not only help in maintaining supply to essential services but would also help in faster restoration of grid," the committee had said in its report submitted to the Power Ministry last year.

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Meanwhile, the country is expected to see an energy shortfall of 6.7 per cent, with high shortages likely to be experienced by Southern region. "This is due to transmission constraints between Northern-North Eastern-Eastern-Western Southern Regional Grid, which restricts flow of power to the Southern region," CEA had said recently.

Delay in allocation of gas causes Rs. 40,000 crore blockage

Besides the existing power plants, there are about 8,000 MW gas-based power plants under construction and the gas linkage to such projects have not been granted due to shortage of gas. Of the 8,000 MW under construction projects, about 1,335 MW have been completed and others are in advanced stages of construction. After commissioning of these under construction projects, total gasbased project capacity will go up to 24,000 MW. They further added the projected investment of around Rs 40,000 crore is at the risk of becoming Non-Performing Assets (NPA). Power Ministry may soon approach Cabinet Committee on Investment (CCI) to seek diversion of as much as 6 million standard cubic meters per day of gas currently consumed by non-core sectors like steel and petrochemicals, to power plants. As much as 15,000 MW gas-based capacity in the country has taken a hit after Reliance Industries Limited (RIL) snapped supplies from its KG-Basin in March this year. "The decline of gas based generation besides affecting bank exposure will also affect economic development, especially of the power-starved Southern region," sources said. There are 55 gas-based stations -- 14 (Andhra Pradesh), 12 (Gujarat), 6 (Tamil Nadu), 5 (Assam), 4 each in Delhi and Tripura, 3 each in Rajasthan and Maharashtra, 2 (Uttar Pradesh) and one each in Haryana and Puducherry. Governmental decisions must be quick and economy progressive but apparently they are pulling the nation behind the schedule and into the dumps. Steps must be taken to resolve this tendency of delaying present in the entire system. The most prominent obstacle in our countrys growth is this kind of attitude where files on the officials desks are eating dust instead of seeing any attention from concerned authorities.

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UPDATES 1. Govt to set up 600MW coal-fired power plant The PML-N government is all set to announce that it will set up a 600MW coal fired power plant in the country, sources close to the policy making circles. Sources maintained that the Nishat Group is likely to be assigned this task along with being the first in line to convert its IPP, AES Lalpir, to coal. This phase is expected to last between two-and-a-half and three years. The financing for it is likely to come from the Chinese engineering and construction companies that are likely to get the contracts for coal-conversion. Significantly, western firms and western finance institutions no longer finance coal-fired power plants owing to their negative environmental impact. In the initial phase, the proposed 600MW power plant will consume imported coal. The necessary modifications will be carried out later to convert it on Thar coal. No one could be contacted in the Nishat Group to comment on the issue. The Council of Common Interests (CCI), on January 23, 2013, approved a new 600MW coal-based power project at Jamshoro. The plant will use a mix of imported and Thar coal and will be set up with a $900 million loan acquired from the Asian Development Bank (ADB). Due to the ADBs reservations, the CCI decided to start the 600MW power plant with 80% imported coal and 20 % Thar coal, and gradually increase the content of Thar coal when it is able to enhance supplies. The ADB had expressed reservations on a government decision to utilise its loan for development of Thar coal and subsequent power generation. The bank said that setting up the Jamshoro plant based on domestic coal is not workable as it had approved the financing of power plants to be run on imported coal. Therefore, it was decided that the project would be initiated with larger imported coal content and supplies from Thar would be gradually increased. 2. Newcastle coal workers strike More than 200 workers at a Newcastle coal terminal will embark on a week of strike action in a bid to secure better workplace conditions. Port Waratah Coal Services (PWCS) employees will conduct protected four-hour stoppages, from 11pm to 3am, every night from Thursday until next Wednesday. The Maritime Union of Australia says the stoppages will occur because a number of conditions haven't yet been agreed upon after more than nine months of negotiations. "We are close to agreement," MUA national assistant secretary Ian Bray said. "However, there remain a few unresolved issues that the workers consider important enough not to walk away from and, as a result, the workers are taking this protected industrial action." He says the union hopes for a speedy resolution to the standoff so workers can "get on with the business of shipping coal to PWCS clients". A PWCS spokesman says the company is disappointed by the latest action but the stoppages won't halt operations over the next week. "We've got contingency plans in place and we'll be unloading trains and loading ships 7 Copyright 2012-13, Energy Review Top

according to that plan safely using trained staff," he told AAP. He said negotiations had been carried out in a "good spirit", adding PWCS was hopeful of finally reaching an agreement. 3. Teck appoints VP for coal as new COO Canada's largest diversified miner Teck Resources on Thursday appointed its VP for coal, Ian Kilgour, as its executive VP and new COO, as the company focuses on cost management amid dwindling commodity prices. Kilgour joined Teck in February 2011 as Teck's senior VP for coal, and would now be responsible for all of Teck's mining operations and joint ventures in its steelmaking coal, copper and zinc business units. Teck also announced that Dale Andres would lead its copper division, following the retirement of Roger Higgins. Andres previously held an executive role in copper strategy and North American operations and was responsible for developing the growth plan for Teck's copper business unit. During Higgins' five years at Teck, the company's copper production had grown from some 300 000 t in 2008, to a yearly rate of 400 000 t in the last half of 2012. 4. Coal scam: CBI books Udit Rathi, directors for fraud, corruption The probe into the coal scam is gathering pace, with the CBI lodging a case against Delhi-based Rathi Steel & Power Ltd, charging the company and its brass with fraud and corruption for misrepresenting facts to secure allocation of Kesla North coal block in Chhattisgarh in 2008. The CBI on Wednesday booked chief executive Udit Rathi and directors of the private company, which was issued a show-cause notice by the coal ministry on June 6 for the gross delay in the development of the coal block, a spokesperson of the agency said. The CBI has carried out raids at the company's office on Delhi's Mathura Road and eight other locations, the spokesperson added. In its show-cause notice issued to the company, which was earlier called Rathi Udyog Ltd, the coal ministry said there was no sign of any mining activity at the Kesla North coal block site and gave the company 20 days to explain the delay. The ministry also threatened to take appropriate action for de-allocation of the block. The company's managing director Pradeep Rathi could not be reached for comments through the day. An executive declined to comment, saying, "There have been raids on the company and we will not be able to respond to any queries." As per the CBI's first information report or FIR, the 13th so far registered by the agency in connection with the coal blocks allocation scam, Rathi Steel & Power Ltd misrepresented its state of preparedness in terms of possession of land to secure the coal block. "It is also alleged that the company was favoured for allocation of coal block over other better placed applicants," the FIR says. The company was allotted the coal block, which was expected to have an annual production of three lakh tonne, for its own sponge iron plant in Orissa. 5. WCL denies alleged supply of inferior quality coal to MahaGenco 8 Copyright 2012-13, Energy Review Top

Coal India Ltd (CIL) and its subsidiary Western Coalfield Limited (WCL) have denied the allegation levelled by the Maharashtra State Power Generation Co. Ltd (MahaGenco) that they supplied sub-standard quality of coal to the stateowned power company. In the affidavit filed before the Nagpur bench of Bombay High Court, the companies said that there was "no basis" to MahaGenco's allegation that it was "forced to import coal due to less quantity and poor quality of coal supplied by WCL". It asserted that joint sampling done by WCL and MahaGenco had endorsed the quality of coal and there was no substance in the allegation of poor quality of coal supplied by WCL which was affecting the power scenario in the state, the affidavit claimed. The PIL alleged that due to the ongoing turf war between WCL and MahaGenco, all the consumers of Maharashtra were forced to shell out more money for electricity. "The primary reason was steep hike in generation cost due to less supply of domestic coal and import of costly coal by power utilities," it said. "Instead of resolving the dispute, everybody is happy to import high-priced coal or purchase costly power produced by private players and burden the state exchequer and consequentially common man of Maharashtra," the PIL said. However, the WCL has blamed MahaGenco for the "mess" asserting that it was following FSA and adhering to agreed quality of coal as per the rate fixed by the Centre. "Even the Coal Controller found no substance in MahaGenco's complaint about quality of coal," the affidavit said. The sampling of coal was conducted at Dumrikhurd, Umrer and Ghuggus sidings of WCL thrice and proximate analysis was conducted at CIMFR, Dhanbad and by a letter dated April 5, 2013, the Coal Controller rejected MahaGenco's demand to change grades, it said. The CIL and WCL also denied allegation of colluding with washery operator and supplying inferior quality of coal. The division bench of Justice A.P Bhangale and Justice Arun Choudhary had issued notices to all the respondents the case - the CIL, WCL, Ministry of Coal, Government of Maharashtra through Chief Secretary and Energy Secretary on Jan 11, 2013. 6. Sixty-nine power plants yet to sign fuel supply pacts with Coal India The coal ministry has informed the Prime Minister's Office (PMO) that of the 69 power plants which are yet to enter into fuel supply pacts with state-run Coal India (CIL), 29 cases belong to NTPC and its joint ventures. The power plants of NTPC and its joint ventures (JV) which have not signed FSAs include Dadri, Korba, Farakka, Simhadri, Bhilai JV and Sipat. Though these power plants of the power PSU have not signed pacts with CIL, most of them are drawing coal under MoU (Memorandum of Understanding), the ministry said. "There are 131 cases of power plants/units which are... for signing of FSAs (Fuel Supply Agreements) by CIL (Coal India) and its subsidiaries. Out of these 131 cases... FSAs for 62 cases have already been executed... Out of 69 cases, 29 cases belong to NTPC and its JVs," the Coal Ministry has informed the PMO. Principal Secretary to the prime minister, Pulok Chatterjee, had in December last year directed that the remaining FSAs should be signed within a month's time. The PMO's directive in December 2012 came after its November 2012 deadline for signing of FSAs was 9 Copyright 2012-13, Energy Review Top

missed. Earlier, the government issued a Presidential Directive to CIL to sign FSAs with the power producers assuring them of at least 80 % of the committed coal delivery. NTPC has not entered into FSA with CIL as it had raised concerns about quality of coal being supplied to its power plants 7. Chinese coal imports may drop in June Xinhua reported that China's coal imports fell 3.9% in May from April due to weakening demand and worries over a government policy to curb low quality coal and may drop again this month. Coal imports, including lignite, totaled 27.57 million tonne, down from 28.69 million tonne in April, according to Customs data. Still, imports were up 5.6% from a year earlier. Analysts said that "The National Energy Administration said last month China may ban imports of coal with low heating value, potentially affecting lignite, which is considered the lowest type of coal. The ban may affect miners in Indonesia, Vietnam and the US." The MoM fall in imports also comes as China reported a slowdown in power consumption growth and amid a steady decline in domestic coal prices, which made imports less attractive. The China Coal Transport and Distribution Association said that "As the price gap between domestic and imported coal is narrowing and coal inventories at most ports are near full, coal imports may fall again in June from May." Coal imports rose 9.7% in April MoM, and 12.5% in March. China, the world's largest coal producer, has become a net importer of the fuel due to a bottleneck in railway transport which caused supply constraints at power plants. 8. Coal of Africa sees 12.6 million mt/year ROM production at Makhado South African junior miner Coal of Africa Limited (CoAL) said Wednesday a definitive feasibility study has determined 12.6 million mt/year of run-of-mine coal production at its flagship Makhado coking coal project over a 16-year minelife. A coal processing plant will be built to handle the 12.6 million mt/year of ROM coal, producing an estimated 2.3 million mt/year of hard coking coal (HCC) -with 10% ash, 31% volatile matter and 1% sulfur -- and 3.2 million mt/year of domestic and export quality thermal coal with 30% ash, the miner said in a statement. CoAL said the DFS determined that Makhado -- in the Soutpansberg coalfield in South Africa's Limpopo province -- has 344.8 million mt of mineable tons in-situ, which will be mined on an opencast basis, with the potential to expand into an underground operation. It said the HCC is expected to have a mine average gate cost of Rand 865/mt ($88.71/mt) after thermal coal byproduct credit. CoAL added that the HCC should produce a metallurgical coke with high coke strength after reaction value of over 60. The miner added that the project also has the advantage of existing infrastructure such as rail, road, power and 3 million mt/year port allocation at Terminal de Carvao da Matola in Maputo, Mozambique to supply the domestic and export markets. CoAL chairman David Brown said the miner has started the financing stage of the 10 Copyright 2012-13, Energy Review Top

project and has also begun discussions with black economic empowerment groups as potential partners, as well as seeking other strategic partnerships. He added that CoAL aims to complete its regulatory approval and funding requirements by the first half of the 2014 calendar year, with full production from 2017. Analysts from investment bank Investec commented in a note Wednesday that, although CoAL has now demonstrated the value of Makhado, securing funding would be a key challenge in bringing the asset into production. 9. Power producers may be allowed to pass fuel cost to consumers The government is likely to consider a mechanism on Friday to allow power companies pass on the burden of expensive imported coal to electricity consumers. This mechanism would benefit power plants owned by companies like Reliance Power, Adani Power and Lanco Infratech and having total capacity of 78,000 mw. The plants, commissioned after 2009, will secure 80% of their coal requirement from Coal India Ltd. As per latest fuel pacts, Coal India Ltd has agreed to supply 65% of the requirement from domestic mines and the rest 15% through imports. Under the mechanism, the entire cost of imports is proposed to be passed on to the consumers. This is against an earlier proposal of averaging prices of imported and domestic coal. "The cabinet committee on economic affairs is likely to discuss a price pass-through mechanism for power plants that have fuel pacts with CIL. The cost of imported coal will be borne by the consumers," a power ministry official said 10. Jakson Power to double revenue by March 2016 Jakson Power Solutions, a power solutions company, today announced plans to double its revenue by March 2016 to Rs. 2500 crore. As part of its strategy to double revenues, the company will increase its market share in diesel-based power generation in India. It plans to manufacture 12,500 generating sets by the year 2016 compared with 8,000 units now. Jakson Power has started manufacturing generating sets at its Kalsar plant in Gujarat apart from Daman and Jammu units. This plant will be India's largest integrated DG Set manufacturing facility and it will also focus on manufacturing of special application generating sets like defense. The company currently manufactures Acoustic Enclosures at the facility for Cummins India Ltd, besides using them for its captive consumption. The Greater Noida plant focuses on manufacture of Solar & Power Distribution Products. The range of diesel generators spans from 7.5 KVA to 3000 KVA. The plants at Kalsar and Daman would be manufacturing generating sets upto 250 KVA capacity and higher capacity would be produced at Jammu plants. Sameer Gupta, managing director, Jakson Power Solutions, "The generating set market in India would continue to grow at 10% to 12% per annum and as a leader in this segment, Jakson has proactively made investments in doubling up the manufacturing capacity. Jakson who has more than 3 decades old relationship with Cummins remains committed to providing technologically efficient, non-polluting generators to the consumer." 11 Copyright 2012-13, Energy Review Top

Going forward with its overall business strategy, the company has also recently invested in Solar Power Plant and has commissioned its own 20 MW IPP in Bap, near Jodhpur in Rajasthan with the investment of around Rs. 200 crore. The company has signed 25 years power purchase agreement (PPA) with NVVN (NTPC Vidyut Vyapar Nigam Limited) for this project. The company is planning to increase the overall generation capacity from 80 MW to 100MW within next three to four years with an investment of Rs. 750 crore. TENDERS

1. NTPC has invited Expression of Interest (EoI) from short listing agencies for transportation of fly ash. The interested agencies having experience of transporting fly ash through railway wagons may participate. Dry fly ash shall be made available from the DAES (Stage II) silo on as available basis for a period of 5 years. For further details visit www.ntpctender.com 2. BHEL invites tender for procurement of 3 tons Electrically operated hoist for various projects. For further details please visit www.bhel.com 3. BHEL invites bids for supply of constant Load Hangers as per BHELs requirements. Interested candidates may visit www.bhel.com. 4. NTPC invites sealed tenders for various supplies in two parts (Part A & B) from eligible international/domestic bidders. Please visit www.ntpctender.com for further details.

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Oil & Gas

Oil subsidy math goes for a haywire
Just when finance ministry officials had dropped their guard on subsidies, the near-10% fall in the rupee against the dollar has compelled them to pull out their calculators. After all, finance minister, P Chidambaram had gone public saying that the government will pay only Rs 20,000 crore as under-recoveries, a move that would have meant that the Centre stayed within the Budgeted subsidy level. Between the time Chidambaram made the statement four weeks ago and midJune, the cost of crude for Indian refiners has increased by $3 a barrel to $104 now. During this period, under-recoveries on diesel alone have shot up by almost 70% to Rs 6.30 a litre as the under-recovery on the motor fuel goes up by 78 paise the moment the price of crude rises by $1 a barrel. Similarly, with a $1 increase in the price of crude petroleum, annual underrecoveries for oil retailers rise by 8,000 crore. So, a $3 increase in the cost of Indian basket of crude would mean a Rs. 24,000 crore impact on oil retailers. Although crude price eased on Thursday, the fall in the rupee against the dollar would negate the gain. While the finance ministry would want upstream players such as ONGC and Oil India and retailers to bear the burden, officials admit that the task won't be easy, given the fragile finances of the state run companies. At the same time they also recognize that passing on the entire burden to the consumer is not simple either. "It will definitely impact profits and underrecoveries," said Indian Oil Director (Finance) P.K. Goyal, although he rules out the need for any package, at least just yet. Oil companies would simply want flexibility in increasing fuel prices, especially diesel that is a politically-sensitive issue. While Chidambaram's subsidy calculations were based on the assumption that the under-recovery on the fuel would be wiped out by the time elections in five states take place later this year, the rising gap between local and international fuel prices is making the task tougher. There is every chance that the government will have to allocate more funds for oil subsidy, putting pressure on overall finances. Of the Rs. 65,000 crore allocated this year, Rs 45,000 crore has already been used in clearing last financial year's arrears. Even the food subsidy allocation may come under strain if the proposed policy is implemented. But as officials say, there is always the possibility of squeezing expenditure, something that they did last year.

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Natural gas price may hike up

The Cabinet may consider next week across-the-board hike in natural gas prices after key finance and fertiiser ministries have endorsed Oil Ministry proposal for a 60 % increase in rates immediately. The Ministries of Finance, Power and Fertiliser have sent their comments on a revised note floated by Oil Ministry for pricing natural gas, as per the formula suggested by Prime Minister's economic advisor C Rangarajan headed panel. The panel had suggested pricing domestic gas at an average of rates at three key international hubs - US Henry Hub, National Balancing Point of UK and wellhead prices of supplies into Japan, and the actual cost at which India imports liquid gas (LNG). The price as per the formula in the current quarter comes to USD 6.775 per million British thermal unit as against the current rate of USD 4.2 per mmBtu. Ministry of Finance wanted some changes in the pricing methodology by excluding international hub rates and pricing domestic gas at rate equivalent at the actual cost of LNG to India on a long-term contract. The gas price, if the Finance Ministry's suggestion is accepted, would come to USD 6.79 in the immediate future and USD 8.93 by the end of current fiscal. It would rise to USD 10.29 in 2014-15 and USD 10.92 in the subsequent year. Price of gas as per Oil Ministry proposal formula would be close to USD 12 in 2014-15 and USD 14 in the next year. The power ministry pitched for a gas price of no more then USD 5 and no change in rates of gas produced by state-owned firms like ONGC, called APM gas. Oil Ministry has rejected the suggestion of no change in APM price saying producers need to be incentivized to raise output. The Fertiliser Ministry was largely in agreement with the proposal for revising rates every quarter. Oil Ministry has proposed raising gas price for state-run firms immediately and that for Reliance Industries from April 2014 when it is contractually due. The hike in natural gas price by USD 1 would result in Rs 3,155 crore per annum hit on fertiliser plants for producing 23 million tonnes of urea this fiscal and Rs 4,144 crore a year for 32 million tonnes of urea production from 2017-18, sources added. The impact of every dollar hike in gas price would be about Rs 10,040 crore per annum on the power sector.

ONGCs subsidy bill may rise 22% this year

State-run Oil and Natural Gas Corporation (ONGC) expects its subsidy burden to rise 22% to Rs 60,000 crore this fiscal, which threatens to offset the gains from the rupee's fall. The rupee's recent fall is expected to bring windfall profits to energy companies like ONGC when they sell natural gas in US dollars. However, 14 Copyright 2012-13, Energy Review Top

for ONGC this is likely to get diluted by the expected rise in its subsidy bill. The entire upside of the rupee devaluation gets shaved off as the company's senior management now expects ONGC's subsidy payments to rise to Rs 60,000 crore this fiscal, as it expects to shell out more discounts to PSU fuel retailers, given the way the rupee is behaving currently. "Even with the recent hike in petrol prices, and the upcoming revision in diesel prices, we expect our subsidy burden to increase substantially this year," an executive said. Executives of OMCs said that with the rupee in free fall, the under-recovery on diesel has risen to Rs. 7 per litre from Rs. 3 at the beginning of the year. They also said that after the Rs. 2 increase in petrol prices last week, there is no under-recovery on petrol at present. Investors and industry experts had been expecting huge gains for ONGC after the rupee's fall to an all-time low last week, as it would have benefited from selling natural gas in dollars. "A simple back-of the-envelope calculation suggests that on 50 mscmd of gas output, ONGC could see a daily gain in excess of 1 crore," said another senior executive. Pricing of domestically produced gas was changed from the Indian currency to the USD at the oil ministry's behest in May 2010 when rates were revised to $3.818 per million British thermal units ($4.2 per mmBtu after including royalty) from Rs 3,200 per thousand cubic metres (equivalent to $1.79). "On a full year basis, at the current rate of output of 50 mscmd, ONGC could gain close to Rs. 500 crore," said the market source. The subsidy burden has already taken its toll on ONGC's profits. For 2012-13, the energy giant's profit after tax dropped 16.7% to Rs 20,926 crore on a subsidy outgo of Rs. 49,421 crore, compared with Rs. 44,466 crore in the previous year. Last month, with the softening of oil prices to $97-100, ONGC had written to the government seeking a reduction in the discount it offers to PSU refiners on crude purchases, but it did not yield a response. The company has sought a $60 per barrel realization on sales, up from the current $47 per barrel.

Cap on subsidized cylinders causes reduction in LPG usage in the country

A tight vigil against diversion of subsidized fuel meant for domestic use seems to be paying off. The consumption of liquefied petroleum gas (LPG), commonly called cooking gas, has started to dip since the government capped the sale of subsidized cylinders to every household and for the first time ever, sales have fallen for two successive months in comparison to the corresponding period of the previous year. Consumption fell 0.7% in April 2013 over April 2012 while in May the decrease was pronounced to be at 5.2%. The government capped the number of LPG cylinders for a household to six a year effective September 2012, 15 Copyright 2012-13, Energy Review

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but later enhanced the limit to nine per year in January 2013 under pressure from political allies. Each subsidized 14.2 kg LPG cylinder is priced at Rs. 398 in Chennai and Rs. 410 in Delhi, while the price of non-subsidized refill costs Rs. 792 in Chennai and Rs. 802 in Delhi. Any consumption beyond nine cylinders is not subsidized. During April-May 2013, cooking gas consumption in India fell to 2.4 million tonnes from 2.5 million tonnes in April-May 2012, a fall of 3.3%, according to provisional data from the three state-owned oil marketing companies. This includes both piped as well as bottled LPG. Oil planners had anticipated a 4-6% growth in LPG consumption for the 2013-14 fiscal. But, early figures suggest growth may be slower. LPG consumption grew around 10% in 2011-12 before it dropped sharply to 1.8% in 2012-13. "Households now realize the need to hold back LPG cylinders only for cooking purposes as any usage more than stipulated limits will cost them significantly," oil industry sources told TOI. Interestingly, while sales of the 14.2-kg cylinder meant for domestic use has dipped, officials said consumption of the 19-KG cylinder meant for commercial purposes has grown around 10% since September 2012 (when the order to cap subsidized cylinder was announced). "The growth in consumption of auto LPG has been nearly 20% since September," the official said. While it is evident that diversion of subsidized LPG for commercial and automotive purposes has halted, some analysts also attribute it to a slump in industrial activity. "Consumption of all petroleum products in May 2013 was a meager 1.7%, as per provisional data. That is because of economic slowdown. LPG consumption could also be low because of slowdown effect," an analyst said. Not just LPG, a combination of factors including a slowdown in sales of diesel vehicles, drop in prices of furnace oil and overall sluggishness in economic activity has resulted in a dip in diesel consumption too. During April-May 2013, diesel consumption grew 5.9% at 12.5 million tonnes as against 11.8 million tonnes in the comparable period in 2012. In fact in April, diesel consumption was a poor 4.2%. Overall diesel consumption growth for 2012-13 was at 6.8% compared to 7.8% during 2011-12.

Niko increases proved reserves by 160%

The Company has received the final draft of the reserve evaluations for the D6 and NEC-25 Blocks in India and Block 5(c) in Trinidad and Tobago, and the final reserve evaluation for Block 9 in Bangladesh from independent petroleum engineering firms. The evaluations for the D6 and NEC-25 Blocks in India and Block 5(c) in Trinidad and Tobago are subject to final review and signoff by the independent reserve engineering firm. These evaluations have been prepared in accordance with National Instrument 51-101 - Standards of Disclosure for Oil 16 Copyright 2012-13, Energy Review

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and Gas Activities and the Canadian Oil and Gas Evaluation Handbook, with an effective date of March 31, 2013. "This is a very positive reserve story for Niko. And not reflected in these reserves is the recently announced MJ-1 gas condensate discovery in the D6 Block in India, which we feel could add significantly to future reserves," said Edward Sampson, Chairman, President and CEO of the Company. The Pananda-1 exploration well in the North Makassar block, located offshore Kalimantan in the deepwater Makassar Strait of Indonesia, was drilled in water depth of 7,433 feet to a total depth of 19,685 feet in 50 days, and an 80 foot gas interval was identified in the upper section of the well. Drilling confirmed the presence of hydrocarbons in a previously untested Middle Miocene turbidite package in a basin floor setting. A thick package of over 700 feet of very fine grained distal turbidites was drilled, although poor reservoir properties indicate non-commerciality at this location. The Pananda-1 well is situated approximately 40 kilometres southeast of the Chevron-led deepwater development project at Gehem field. Additional prospectivity in the Middle Miocene turbidite play remains to be evaluated in the vicinity of Pananda-1. Niko holds a significant acreage position in this play trend along with joint venture partners Statoil, Eni, GDF Suez and Black Platinum Energy. The Ocean Monarch drilling rig is mobilizing to the Cendrawasih PSC in Eastern Indonesia, where it will spud the Elang-1 well in early July, 2013. The Company has reached an agreement with Repsol SA in which a Repsol subsidiary company will become a joint venture participant in the Cendrawasih PSC. As a result of the farmout, Niko will operate with a 70% interest and Repsol will have a 30% working interest in the PSC. The transfer of interest is subject to approval by the Government of Indonesia.

UPDATES 1. Statoil makes second Flemish Pass basin oil discovery Statoil has made the companys second discovery of light, high-quality oil in the Flemish Pass basin offshore Newfoundland but said it cannot yet judge the finds resource potential. The company encountered oil while drilling its Harpoon prospect in 1,100 m of water on EL 1112 about 500 km northeast of St. Johns, Newf., and 10 km southeast of the 2012 Mizzen oil discovery that Statoil estimated to hold 100-200 million bbl of oil. As part of its 2013 three-well exploratory program off Newfoundland, Statoil is currently drilling its Federation prospect in the Jeanne dArc basin. The company will then return to 17 Copyright 2012-13, Energy Review Top

the Flemish Pass basin to drill the Bay du Nord prospect southwest of the Harpoon and Mizzen discoveries. Statoil is operator of Harpoon with a 65% interest, and Husky Energy has 35%. 2. Vietnam: Vinh Thuan discovery well sub-commercial Mitra Energy Ltd. will plug and abandon its 45-VT-1X Vinh Thuan well on Block 45 offshore Vietnam as a sub-commercial oil and gas discovery. The Ensco 107 jack up drilled the well to 2,245 m true vertical depth subsea, and MDT and minidrillstem tests validated the presence of oil and gas. 45-VT-1X is the second in a three-well Mitra-operated program on the Block 45 and Block 46/07 PSCs. Upon plugging, the rig will move to Block 46/07 to drill the 46/07-HC-1X Hon Chuoi well. Mitra holds a 35% operated working interest in the PSC. Talisman Energy has 35% subject to government approval and Petrovietnam Exploration & Production has 30%. 3. Total obtains stake in Bokhtar PSC in Tajikistan Total E&P Tajikistan BV has finalized acquiring a 33.33% stake in the Bokhtar production-sharing contract in Tajikistan from Kulob Petroleum Ltd., a subsidiary of Tethys Petroleum Ltd., and held jointly with CNPC Central Asia BV, a subsidiary of China National Petroleum Corp. Tethys Petroleum noted that the Amu-Darya basin in neighboring Uzbekistan and Turkmenistan contains some of the worlds largest gas and gas-condensate fields and that the same reservoirs have yet to be drilled in the basins Afghan-Tajik extension in southwestern Tajikistan. This Tajikistan government approved the transaction. The Bokhtar PSC covers 36,000 sq km at the northern end of the prolific AfghanTajik basin. The PSC area is 300 km from China. Operations will be conducted through an operating company, Bokhtar Operating Co. BV. BOC plans a large seismic survey, and tentatively expects to make a decision on a first exploration well by yearend 2014. 4. FPSO en route to Papa Terra heavy oil field offshore Brazil The P-63 floating production, storage, and offloading vessel left the Quip/Honorio Bicalho shipyard in Rio Grande, Brazil, after the modules were integrated, and the platform was commissioned, Petroleo Brasileiro SA (Petrobras) said. The FPSOen route to Papa Terra heavy oil field 68 miles off Rio de Janeiro in 3,940 ft of waterwas converted from the BW Nisa tanker at Cosco shipyard in China. Petrobras operates Papa Terra field, which has 14-17 gravity oil in the Campos basin. Petrobras believes the P-63 FPSO will help increase oil production to reach the companys overall production target of 2.75 million b/d by 2017. With a capacity to process 140,000 b/d of oil and compress 1 million cu m/day of gas, the unit is going to the Papa Terra field in the postsalt Campos basin. Papa Terra is operated by Petrobras with a 62.5% interest. Chevron Overseas of Brazil 18 Copyright 2012-13, Energy Review Top

Ltd. holds 37.5%. The unit arrived in Brazil in January for its final construction stages. 5. CNOOC resumes normal operations at Zhuhai gas terminal CNOOC Ltd. has restored normal operations on the subsea natural gas pipeline serving the Zhuhai terminal, which leaked in December 2011. The Zhuhai terminal is also now operating normally. CNOOC completed temporary repairs of the third-party damage to the pipeline mid-January 2012, and has been supplying gas to customers since. Severe environmental conditions at the leak site delayed repairs. Zhuhai terminal, on Hengqin Island, Zhuhai city, is the gas processing terminal for joint development of both the Panyu 30-1 gas field and Hui Zhou 21-1 oil field in the eastern South China Sea off Guangdong Province. 6. Cabinet may consider hike in gas price next week The Cabinet may consider next week across-the-board hike in natural gas prices after key finance and fertiliser ministries have endorsed Oil Ministry proposal for a 60% increase in rates immediately. The ministries of Finance, Power and Fertiliser have sent their comments on a revised note floated by Oil Ministry for pricing natural gas, as per the formula suggested by C Rangarajan panel. The panel had suggested pricing domestic gas at an average of rates at three key international hubs US Henry Hub, National Balancing Point of UK and well head prices of supplies into Japan, and the actual cost at which India imports liquid gas (LNG). Sources said the price as per the formula in the current quarter comes to $6.775 per million British thermal unit as against the current rate of $4.2 per mmBtu. Ministry of Finance wanted some changes in the pricing methodology by excluding international hub rates and pricing domestic gas at rate equivalent at the actual cost of LNG to India on a longterm contract. 7. GSPC, Adani Gas hike CNG prices Citing failure of the Centre in supplying natural gas at cheaper rates, GSPC Gas has increased prices of CNG and PNG, prompting Adani Gas, too, to follow suit. In a statement, GSPC Gas said it has increased prices of compressed natural gas (CNG) by Rs 2 per kilogram with taxes effective from June 19, from the existing Rs 60.15 to Rs 62.15. In the case of piped natural gas (PNG) for domestic use, the prices have been increased from the existing Rs 21.50 per standard cubic metres (SCM) to a bimonthly slab as per consumption. Accordingly, the rates for the first 30 SCM will be Rs.25.50, for 31 to 40 SCMs Rs 34.10 and for 41-plus SCMs Rs 40. Close on heels of GSPC Gas, Adani Gas Ltd also revised CNG prices by Rs two per kg, in Ahmedabad and Vadodara, on Wednesday, from Rs 63.80 to Rs 65.80, citing depreciation in Indian rupee against the US dollar and the upward revision in imported LNG price. In the absence of allocation of gas by the Centre under administered price mechanism (APM) to Ahmedabad, Adani 19 Copyright 2012-13, Energy Review Top

Gas has to depend on expensive R-LNG supplies to fulfill the growing demand by the CNG users, the company said in a statement. 8. Reliance's oil imports down 12% in May y/y Reliance Industries, owner of the world's biggest refining complex, imported nearly 12 % less oil in May compared with a year earlier, tanker arrival data made available to Reuters showed. Reliance, which has a diversified crude slate and shifts purchases to maximise revenue, bought about 1.17 million barrels per day (bpd) of oil in May, a decline of nearly 18% from April, the data showed. Reliance's two advanced refineries in western Gujarat state can together process 1.2 million bpd of oil, about 28% of India's overall capacity. In the first five months of 2013, the private refiner shipped in about 1.22 million bpd of oil, a 3 percent decline from a year ago, the data showed. In January to May, it bought about 48% of its oil needs from Latin America, with Venezuela maintaining its position as top crude supplier, which it has held since May 2012, followed by Saudi Arabia. The Neutral Zone, a border area whose production belongs to Saudi Arabia and Kuwait, was the third-biggest oil supplier to Reliance in the first five months of this year. Reliance has an annual deal with Saudi Aramco to buy about 240,000 bpd oil, including 60,000 to 65,000 bpd from its fields in the Neutral Zone. Reliance's imports from outside the Middle East included Merey and Leona from Venezuela, Jubarte and Roncador from Brazil, Maya from Mexico, Castilla from Colombia, Lokele from Cameroon, Mandji and Olende from Gabon, Dalia from Angola and Gharib Blend from Egypt. 9. Shell to resume Niger oil spill compensation talks Oil company Shell will resume talks next week in London with lawyers representing 15,000 of the poorest people in the world who are claiming millions of pounds compensation for oil spills on the Niger delta. But Martyn Day, of Leigh Day law firm which is acting for the communities, said the case could still go to a full high court trial in London in 2014. The Shell Petroleum Development Company of Nigeria (SPDC) has admitted liability for two spills from a pipeline in the Niger delta in 2008, but the company disputes the quantity of oil that was spilled and the damage that was done to livelihoods and the environment near the coastal village of Bodo in Rivers State. Oil spill experts working for the communities estimate that nearly 500,000 barrels leaked from the company pipeline over several months, Shell claims it was far less. The legal action, represents the first time Shell or any oil company has faced claims in the U.K. from a community from the developing world for environmental damage. We have agreed to negotiate over the next two to three weeks. Probably the talks will go on into the autumn when a deal will become more likely, said Mr. Day. The legal development came as Netherlands National Contact Point (NCP), which oversees the implementation of OECD guidelines on the human rights and environmental records of multinational companies, broadly backed claims by Amnesty International and Friends of the Earth International that Shells 20 Copyright 2012-13, Energy Review Top

repeated assertions that sabotage is responsible for most of the oil spilt in Nigeria is based on flawed investigations which rely on information provided by the company itself. The two organisations offered NCP video evidence of serious flaws in the system used by Shell for investigating oil spills. 10. Chevron Says Cost Pressures in Australian Resources Still Intense Chevron is leading development of the Gorgon liquefied natural gas project and the nearby Wheatstone terminal as it looks to meet Asia's rising demand for clean-burning fuels, but has repeatedly warned that labor costs and red tape is making investments in Australia less attractive. In December, the U.S.-based company unveiled a 21% cost overrun at Gorgon to 52 billion Australian dollars (US$48.4 billion). Wheatstone, which is at an earlier stage of construction, remains within its US$29 billion budget. "The cost pressures remain-there is no let-up, obviously, in wage demands," said Colin Beckett, Chevron's general manager of the Greater Gorgon area. Many in the industry think "we can continue to increase wages, at the same time as having declining productivity", but this is misguided given Australia's emerging gas-export sector faces competition from new East African and North American suppliers in future, Mr. Beckett said at an industry conference. "When it comes to the costs of goods and services I don't see any falling off in terms of costs," he said. Resource companies contribute more than 120 billion Australian dollars (US$115 billion) a year to Australia's economy, with coal and iron the country's largest exports and China the largest buyer. However, most recent investment has been focused on developing the country's vast resources of natural gas for export, with Gorgon and Wheatstone among seven projects currently under construction.

TENDERS 1. GAIL (India) Limited invites online bids (E-bids) from eligible bidders for Providing of Security care taking and Loss Prevention Services along the Natural Gas Pipeline Network and Installations of KG Basin under GAIL, Rajamundry in Andhra Pradesh. Bid due date and time are 05.07.2013 and 14:00 hrs resptly. Bid opening date is 05.07.2013 at 15:00 hrs resptly. For further details please visit www.etender.gail.co.in. 2. Worley Parsons on behalf of HPCL, invites bids under two bid system from eligible bidders for On-line Sulphur Analyser System. The bid due date is 17.07.2013 till 15:00 hrs and bid opening is in the same day at 15:30 hrs. For further details visit the companys website or contact Manager, Procurement & Contracts on sunilkumar.upadhyay@worleyparsons.com. 3. Indraprastha Gas Limited (IGL) invites sealed bids under single, two envelope system form eligible candidates for Rate contract for fabrication of MRS work and internal piping work. The bid due date is 05.07.2013 at 14:30 hrs. For further details please visit the companys website. 21 Copyright 2012-13, Energy Review Top

4. Indian Oil invites tender for Periodic repair and maintenance of various water facilities like drinking/flushing water supply system with CPVC/GI piping, water fountain system, sensor controlled wash basin and integrated urinal systems etc along with misc. plumbing services at corporate office, Delhi. For further details please visit the companys website or contact Mr. R.K Roy, Chief Project Manager (Contracts) on royrk@indianoil.in 5. HPCL invites bids through two bid system from bidders for Transportation of Packed Bitumen by road in Open Body Trucks Ex-Vishakhapatnam Bitumen COD/Hincol COD to various locations Please visit the companys website to download the NIT and for further details. 6. Carin India Limited invites global EoI for Procurement Of Straddle Gas Lift System And Isolation Patch System And Provision Of Running/Retreiving Tools And Personnel On Rental Callout Basis for CB-OS/2 and Ravva offshore block. Please visit for www.cairnindia.com for further details.

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Renewable
Renewable energy attractiveness index slipping in the country
High entry-barriers for foreign investors and the rising cost of financing have led to the India slipping to a low eighth position on the renewable energy country attractive index in the first quarter of 2013. According to a report 'Renewable Energy Country Attractiveness Index' by Ernst & Young, India's ranking slipped from fourth position to eighth this period, due to several challenges, including high cost of finance, entry-barriers for external investors, among others. "A high barrier to entry for external investors causes India to score lower than most of its top 10 rivals. Also, bankability is jeopardized by the high cost of financing and significant infrastructure barriers here," E&Y India partner and national leader for clean-tech said. However, the index sees the country gaining the 'hot spot' as the market with increased focus on the role of renewable energy driving new levels of power sector investment and aiming to nearly double the amount it generates from renewable sources. "While the country's rating may have slipped, there are significant positives. India is only behind Belgium in the priority the renewable sector receives," he said. At the operational level, E&Y said, "Withdrawal of accelerated depreciation, caused the overnight disappearance of the wind retail market. However, this has also brought to the fore the independent power producers, mostly backed by large PEs. The wind sector's size has therefore shrunk, but it has also arguably resulted in a stronger market, with IPPs committed to setting up quality assets". On the solar energy front too, there has been active interest in the bids across states, the phase-II of the national mission is eagerly awaited, Chakrabarti said. Chakrabarti, however, said the country is embroiled in trade wars that are sweeping through the global solar market. In February, the US lodged a complaint with the WTO that domestic content requirements attached to the National Solar Mission allegedly discriminate against US solar equipment imports. "India is currently in talks with the US over the complaint, but the government insists that more than 70 % of the 551 mw solar capacity installed since the start of the mission has been built using imported modules. Last November, the country began its own anti-dumping investigation for solar cells from the US, mainland China, Taiwan and Malaysia," Chakrabarti said. The index includes a revised methodology to reflect the shifts in investment drivers and the maturing of the sector. The ranking is made based on increased focus on the role renewable energy plays in country's energy mix, energy supply and demand, the cost competitiveness of renewable energy, the importance of de-carbonization 23 Copyright 2012-13, Energy Review Top

and an increased emphasis on the economic and political stability of each particular market.

Tata Solar plans on over $1 Billion Opportunity in India

Tata Power Solar Systems, a division of India's biggest company Tata Group, sees installing solar systems in India as a $1.3 billion opportunity. That's because it will cost more for commercial and industrial customers to get their electricity from the grid by 2016 than from their own solar systems. "We're seeing a huge uptake as we get closer and closer to grid parity," CEO Ajay Goel said. "Corporate customers are coming to us to install solar on their rooftops or land on the side of their factories because it can provide energy cheaper than from the grid." Formerly a joint venture with oil company BP, the company has been manufacturing solar panels, but it needs to move beyond that because of the world glut caused by Chinese manufacturers. So far, Tata has developed and installed solar systems for Indian divisions of Dell and IBM, among others. The payback period can be just a year if a company can depreciate the systems on taxes and four years if it can't. And the economics look even better if the cost of diesel is included to cope with daily blackouts, says Goel. Using diesel generators costs double that of solar. Solar is cheaper than grid-based electricity now in about 10% of India's states for hotels, shopping malls and other commercial enterprises that pay the highest rates (electricity rates differ depending on the type of business and its location). Rates have risen 15% since 2010, while solar electricity dropped 39%, according to Bloomberg New Energy Finance. By 2016, solar will be cheaper than gridbased electricity in 60% of states and by 80% if government subsidies are included in the calculation, Goel said. In 2009, India set a target of building 20 gigawatts (GW) of solar capacity by 2020, under its National Solar Mission, or 10% of electricity. For renewable energy, the target is 80 GW by 2020. Last year, Tata Power, India's largest utility said it's giving up on new coal plants and focusing on renewable energy instead. Ratan Tata, Chairman Emeritus of Tata Group is one of the leaders involved in launching The B Team, which wants to transform businesses into a "force for good," instead of focusing solely on profits.

Solar Bill that could add 2.2GW by 2023

New York state legislators gave their resounding approval to a solar bill that could see 2,200 MW of new installations by 2023. The New York Solar Bill 24 Copyright 2012-13, Energy Review

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(A.5060b/S.2522) was passed by the state Assembly by 76 to 16 votes and would enact Governor Andrew Cuomo's 10-year solar programme proposed earlier this year, building on the success of the NY-Sun Initiative, a public-private partnership designed to drive growth in the states solar industry and lower solar costs. Solar has gained increasing attention from state lawmakers following the devastation caused by Hurricane Sandy, which exposed New Yorks energy infrastructure as grossly outdated and unable to weather the effects of climate change. Lawmakers must now prepare the final bill for signing by Governor Cuomo's desk before the summer recess. Dave Gahl, Executive Director of Environmental Advocates of New York, said: Lawmakers should not leave town this month before giving final passage to the New York solar bill and sending agreed-to legislation to Governor Cuomo for his signature. New York's sun is underemployed, and by passing this bill the legislature can put it to work." The Senate version that was passed in April had an additional manufacturing tax credit piece that is not contained in the Assembly version. A Vote Solar spokeswoman said: "We're urging lawmakers to focus on what they agree on the 10 year extension of NY Sun - and deliver a single bill to the Governor. The primary job and investment opportunity is on the installation side of the solar equation, so we think it's important that they focus on the NY Sun programme extension and the jobs will follow." The bill represents New York's second milestone achievement for solar policy this month. The New York Public Service Commission approved a decision to triple the states net metering cap from 1% to 3% of 2005 system pe ak load for each of the state's five utilities. This could add a further 462MW of distributed generation (DG) in New York. Jason Keyes, lead attorney for the Interstate Renewable Energy Council said: "With solar projections expected to continue to rise sharply in the near future, this decision comes at a particularly crucial time. As NEM capacity in three of the five utilities is over 75% subscribed, New York's current 1% cap would have presented a major hurdle to future development in the state."

New Clean Energy Test Centre in US

The US Energy Department and National Renewable Energy Laboratory (NREL) are to develop a US$135 million test centre in Colorado for new utility-scale clean energy grid integration technologies. Colorado-based Advanced Energy Industries (AEI) has already signed up as the first private partner for the Energy Systems Integration Facility (ESIF) and plans to develop improved solar inverters at the centre. Located at NRELs campus in Golden, ESIF will explore how different renewable energy technologies interact 25 Copyright 2012-13, Energy Review Top

with each other and the grid at a utility scale. Its aim is to overcome the generation, transmission and distribution challenges arising from the increasingly large volumes of renewable energy generation being integrated into the grid. Technologies under examination include energy storage batteries and micro-grids. The new US energy secretary Ernest Moniz said: Our National Laboratories are a national treasure that helps Americas entrepreneurs and innovators to accelerate the development of new technologies. This new facility will allow for an even stronger partnership with manufacturers, utilities and researchers to help integrate cleaner, renewable energy into a smarter, more reliable and more resilient power grid. As ESIFs first industry partner, AEI will use the facilitys utility -scale grid simulator to test the performance of its latest PV inverter technology.

Latin America and the Caribbean brimming with Renewables: Might be an investment opportunity
Latin America and the Caribbean's renewable energy endowment is widespread enough to cover its projected 2050 electricity needs 22 times over, according to a new report commissioned by the Inter-American Development Bank (IDB). The report, rethinking our Energy Future, argues that lower prices and new technologies are making renewables a viable alternative. Solar, geothermal, wave, wind and biomass sources in this region could produce up to 80 petawatthour of electricity. One petawatt-hour is equivalent to one trillion kilowatt-hours, roughly three times the amount of electricity Mexico consumes in one year. At present, Latin America generates 1.3 petawatt hours. By 2050, demand is expected to grow to between 2.5 to 3.5 petawatt-hours. The report addresses a series of myths surrounding renewable energies, noting that several of these alternative technologies have become price competitive with conventional technologies, offer good investment opportunities and should be taken into consideration by policymakers aiming to diversify their national energy matrixes, reduce fuel supply vulnerabilities and cut greenhouse gas emissions. "Though Latin America uses more renewable energy than any other region in the world, it faces difficult choices as it seeks to generate the electricity it needs to grow without harming the environment," said IDB President Luis Alberto Moreno. "Renewables are becoming a viable and attractive option that needs to be explored." "With this study, we seek to promote concrete action and public-private partnerships, by putting into perspective the magnitude of available renewable sources, outlining their broadened benefits and illustrating policy options," said Walter Vergara, head of the IDB's Climate Change Division and lead author of 26 Copyright 2012-13, Energy Review

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the report. In 2012, global investments in alternative renewable technologies (solar, wind, geothermal, ocean, small-scale hydropower and advanced bioenergy) and traditional hydropower amounted to $244 billion, of which Latin America represented a modest 5.4 %. To tap into its vast potential, the region must modernize its policy and regulatory frameworks and scale up investments. While investments in renewable energy have been limited so far, the major new developments are underway in Latin America. Wind is the fastest-growing nontraditional renewable source in the region. Mexico is the fifth largest producer of geothermal energy in the world and Colombia, Panama and Ecuador are exploring their own resources. Biomass, solar and wind are increasingly being used in Brazil, Mexico, Guatemala, Argentina and Chile. The study concludes that, regardless how each country may shape its energy policy, increasing the penetration and use of non-traditional renewables makes sense for Latin America and the Caribbean. The Inter-American Development Bank supports programmes to improve energy efficiency, foster cross-border energy integration, and diversify the energy matrix by sustainably exploiting renewable and non-renewable energy sources. At present, the IDB is financing large-scale wind farms, solar power systems for rural areas, biofuel facilities that co-generate electricity and programmes to promote efficient lighting. It also supports retrofitting hydroelectric facilities with more efficient turbines and ensuring that new dams and natural gas projects meet stricter social and environmental standards.

UPDATES 1. Hydel power plants in Uttarakhand, Himachal operational Hydel power generation from the projects affected by rains and floods in Uttarakhand and Himachal Pradesh has been restored, according to an official. Due to heavy landslides many Hydro Electric Projects had stopped work on account of high silt content in water. The company in a statement said: "Due to recent heavy rainfall, the water inflow in Tehri Dam from Bhagirathi and its tributaries reached about 7,000 cumecs, of which a mere 500 cumecs was released from Tehri Dam Reservoir and remaining 6,500 cumecs of water stored in the reservoir." Tehri reservoir recorded the rise of 25 meters within 48 hours of rainfall on 16-17 June, the statement said. 2. JinkoSolar Supplies 25.8 MW of Solar Modules to First Private Solar Park in India JinkoSolar Holding Co. Ltd., a leading global solar PV power product manufacturer, announced that it has supplied 25.8 MW of high-efficient solar PV 27 Copyright 2012-13, Energy Review Top

modules to the first private solar park in India. Located in Mandrup Village, Solapur District, Maharashtra State, India, the project was developed by Enrich Energy Pvt. Ltd. on a turnkey basis, a pioneer in India focused on developing large scale private solar parks."JinkoSolar's high-efficient polycrystalline modules were used in our first private PV solar park as they will help us to minimize the use of land and maximize the amount of reliable, emission-free solar power generated per dollar invested - which is one of our priorities" said Mr. Ankit Kanchal, Enrich Energy Pvt. Ltd's Director - Commercial. "This is the first project of its kind in Maharashtra State developed under the Average Pooled Purchase Cost (APPC) / Open Access Mechanism & Solar Renewable Energy Certificates (REC) Mechanism.""Enrich Energy is one of our key strategic partners in India and we appreciate their efforts to pioneer the model of turnkey solutions for medium and large-scale solar investors," said Mr. Arturo Herrero, Chief Marketing Officer of JinkoSolar. 3. Welspun agrees funding for 20MW Mumbai solar project Indian renewable energy generator Welspun Energy has finalized the financing of a 20MW solar project in Solapur, Maharashtra. A consortium of unnamed financial institutions have committed to long-term project funding of INR135 crore, with a debt-equity ratio of 75:25. The project will be taken forward by Welspun subsidiary Welspun Energy Maharashtra. Electricity from the project will be sold to Brihanmumbai Electric Supply & Transport Undertaking, Mumbais transport and electricity body. The project will go some way towards addressing the state of Maharashtras annual peak energy deficit, which runs at just under 15%. Welspun Energy has plans to install 1.75GW of solar across India. 4. Intersolar EU 2013: Intersolar AWARD winners recognized Companies across the PV supply chain were recognized for innovation at the Intersolar AWARDs ceremony on the first day of the Intersolar Europe exhibition. Belectric Solarkraftwerke was a winner with its 128MWp PV power plant in Templin (Brandenburg), which used 1.5 million thin-film modules and 114 inverters. Recognition was given due to the plants dynamic controls that enabled a stable operating voltage and compensation for grid fluctuations at all times of the day. Galaxy Energy was also a winner with its design of an energy system for a carbon-neutral building, which does not require gas, oil or wood for heating. Conergy was also recognized for a roof-mounted PV system (8 kWp) at a restaurant in the Spanish city of Barcelona, which was designed for maximum on-site consumption. Winners in the Photovoltaics category included LG Electronics, which had developed the Mono X NeoN. SMA Technology was recognized for its Sunny Boy Smart Energy system. 5. Intersolar EU 2013: Silevo launches 355W 72 cell module 28 Copyright 2012-13, Energy Review Top

US based PV module manufacturer, Silevo has launched the industrys first greater than 350 Watt-peak (Wp) solar module made with 72 of Silevos proprietary Triex 156mm solar cells. The company said the development of the high output module was made possible by scaling up Silevos Triex solar cell technology to a larger cell substrate of 156mm, compared to 125mm substrates usually used in high efficiency solar cells. Cost savings across manufacturing and final installation were touted by the company. Silevo has collaborated with SunEdison to optimize its cell-processing steps to create high-efficiency solar cells that were then packaged into this 355 Wp module. Silevo said that during the first half of 2014 it would have dedicated 156mm cell lines, which will provide greater than 350Wp modules in the marketplace. 6. TTD solar plant to produce 1.5 lakh units per annum Tirumala Tirupati Devasthanams (TTD) executive officer LV Subramanyam on Wednesday inaugurated the solar photovoltaic roof-top power plant at the TTD administrative building. Speaking on the occasion, he said that the TTD is already utilizing the wind mill energy to meet the partial needs of the holy hills, adding that the new solar power plant will generate approximately 1.5 lakh units of power per annum. The L&T Limited, Aeon Renewable Energy solutions (P) Limited and Crux Industries India (P) Limited from Chennai installed the 100 KW solar power plant on TTD administrative building at a cost of `1.25 crore, he said, adding that that the eco-friendly plant will save approximately 100 tonnes of carbon emission annually. He said that the TTD trust board member L Siva Prasad took keen interest behind this non-conventional energy project. Subramanyam felicitated the representatives of the three firms who have installed the 1.25-crore power plant at free of cost. He felicitated the TTD chief engineer Chandrasekhar Reddy and energy manager Somasekhar. 7. Sunrun launches third party leasing in Connecticut Sunrun, a California-based solar company, announced that it would be able to offer third party lease agreements to 90% of utility customers in Connecticut. Sunruns solar power service is available immediately to residents within territories serviced by Connecticut Light & Power and The United Illuminating Company, representing almost all residential customers in the state. In 2012, Connecticut installed 11MW of solar electric capacity, ranking it 21st nationally, according to the Solar Energy Industries Association. 8. GE wins 105MW Michigan order Consumers Energy, one of several large electricity suppliers in the US state of Michigan, has signed a contract to buy 62 of GEs 1.7MW turbines for its 105MW Cross Winds project. Cross Winds, in the east Michigan county of Tuscola, will be Consumers second wind farm in the state, following on from the 100MW Lake Winds project commissioned last year in Macon county which used 29 Copyright 2012-13, Energy Review Top

Vestas machines. The turbine contract was tendered out via a competitive bid process. Consumers, owned by parent company CMS ENERGY, says it expects construction to kick off later this year, as it looks to avail itself of the latest extension of the federal Production Tax Credit. The project is slated for completion in late 2014. 9. China, Japan Driving Africa Renewables Investment Chinese power companies and Japanese trading houses are emerging as major financiers of African renewable energy projects, which saw investment quadruple to $9.3 billion last year, Baker & McKenzie LLP said. Asian investors are increasingly targeting African renewable energy projects, attracted by better returns and strong wind and solar resources on the continent, the Chicago-based law firm said in report today based on a global survey of 140 industry executives. Recent deals include the 20-billion-yen ($205 million) Dorper wind farm in South Africa that sold a 60 percent stake to Sumitomo Corp. (8053) and was partially debt financed by Sumitomo Mitsui Banking Corp., it said. The Export-Import Bank of China also provided $315 million of loans for a 360-megawatt hydropower station in Zambia, according to the report. Last year, Asia-Pacific companies and investors announced $6 billion of acquisitions of renewable energy assets outside of their region, compared with $1.9 billion in 2011, according to the report. 10. Geothermal Power Tanzania Plans First Steam Generation Next Year Geothermal Power Tanzania Ltd. plans to invest as much as $350 million to drill steam fields in the countrys south and build its first geothermal plants with the capacity to generate up to 140 megawatts by 2018. The company began drilling two wells in Tanzanias southwestern Mbeya region this year and found theres potential to create power from steam within at least two systems in the area, Chairman Graeme Robertson said in an interview today. Tanzania, which doesnt currently produce any geothermal energy, lies in the same Rift Valley fault system as Kenya, Africas biggest geothermal-power producer with an estimated untapped resource of as much as 10,000 megawatts. Geothermal energy harnesses steam and hot water from underground to power turbines in facilities that generate electricity.

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Sources: Our researchers and editors keep track of all the sectors of Indian economy from credible sources. Our expertise on news, analytics is based on facts that appear in Business Standard, The Economic Times, The Hindu Business line, Live Mint, The Hindu, The Times of India, Business World, Business Today, Government of Indias Press Information Bureau, company Annual Reports and releases.

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