Week In India: Ministry Announces Waiver of ISTS Charges on Solar and Wind Energy Projects, NTPC Achieves 13.3% Growth in Gross Generation, IEX Electricity Market Trades 5334 MU Volume And More

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UP Discoms Could Save INR 900 cr Annually by Purchasing Power from Cost-efficient Plants

Strict adherence to merit order dispatch (MOD) could result in potential savings of INR 900 crores annually for discoms in Uttar Pradesh, according to an independent study released today by the Council on Energy, Environment and Water (CEEW). MOD is a process via which discoms prioritise the purchase of power from the most cost-efficient plants. Currently, discoms often deviate from MOD due to a range of issues including poor coal availability at some low-cost generating stations, inefficient operational scheduling, and an inherent preference to have state-owned generators dispatch on account of flexible payment terms. Uttar Pradesh’s discoms highlighted a revenue deficit of INR 4500 crore in their recently filed annual revenue requirements for FY 20-21. Power purchase costs account for 75–85 percent of the total annual expenditure of UP discoms. Trimming down power purchase costs, especially adherence to MOD, would be crucial to address this revenue deficit. The CEEW study, based on an assessment of the Ujwal Discom Assurance Yojana (UDAY) scheme, also found that discoms in Uttar Pradesh had lost more than INR 80 paisa on each unit of electricity sold in recent years.

Ministry Announces Waiver of ISTS Charges on Solar and Wind Energy Projects Till 30 June 2023

The Ministry of Power recently issued a waiver of inter-state transmission charges and losses on transmission of the electricity generated from solar and wind sources of energy. Revised Tariff Policy provides that “In order to further encourage renewable sources of energy, no inter-State transmission charges and losses may be levied till such period as may be notified by the Central Government on transmission of the electricity generated from solar and wind sources of energy through the inter-state transmission system for sale.” The Ministry of Power on 13thFebruary, 2018 had issued an Order for Waiver of inter-state transmission charges and losses on transmission of the electricity generated from solar and wind sources of energy.Further, Ministry of Power on 6 th November, 2019 had extended the waiver date from date 31st March, 2022 to 31st December, 2022.

IEX Electricity Market Trades 5334 MU Volume in July ’20 Registers 1% YoY Increase

The electricity market at the Indian Energy Exchange witnessed a total trade of 5334 MU in July ’20. The volume traded in July’20 registered an increase of 11% over June’20 and remained at par with volume traded in July ’19 while the national electricity consumption and peak demand saw 3% decline in July’20. The day-ahead market traded 4487 MU during the month. The market continued to see high sell side liquidity, the total sell bids at 9734 MU were close to 1.9X of the buy bids which stood at 5199 MU. With robust sell side liquidity, the average market clearing price in the day-ahead market during the month at Rs. 2.47 per unit registered a 27% YoY decline over a price of Rs. 3.38 in July’19.

CERC Orders MNRE To Pay Trade Margin of Rs.0.07/kWh To SECI

Central Electricity Regulatory Commission (CERC)  passed an order in the matter of SECI in regards to adoption of tariff for 480 MW Solar PV Projects (Tranche-V) connected to the Inter-State Transmission System and selected through a competitive bidding process as per the Standard Bidding Guidelines. SECI has submitted that the solar power projects are scheduled to be commissioned in the year 2021-22 and these Projects would help the buying utilities/ Distribution Licensees in meeting their Renewable Purchase Obligations (RPOs) requirements apart from providing power at very economical rates. It has also submitted that it has agreed to sell entire 480 MW of solar power to the buying utilities/ Distribution Licensees at the rate of Rs. 2.53/kWh (150 MW) and Rs. 2.65/kWh (330 MW) plus trading margin of Rs.0.07/kWh upon commissioning of the above capacity.

NTPC Achieves 13.3% Growth in Gross Generation in July

NTPC group’s monthly power generation rose by a robust 13.3% to 26.73 BUs in the month of July’20 compared to 23.59 BUs in June’20. As per a statement issued by NTPC Ltd., NTPC Coal stations registered a growth of 5.6% on a YoY basis with generation of 21.89 BU compared to 20.74 BU in July’19. NTPC Korba (2600 MW) in Chhattisgarh achieved over 100% PLF during the month of July 2020. With a total installed capacity of 62910 MW, NTPC Group has 70 Power stations comprising 24 Coal, 7 combined cycle Gas/Liquid Fuel, 1 Hydro, 13 Renewables along with 25 Subsidiary & JV Power Stations.

Assessment Of CERC Draft Power Market Regulations

ERC has released a draft Power Market Regulations on 18 July, 2020. The first power market regulations were issued in January 2010, after which two amendments have been made through gazette notifications. These regulations have come in the backdrop of the Real Time Market (RTM) for electricity which was introduced a month ago by Power minister Mr. R.K.Singh.In India, the short term power market is dominated by two power exchanges, IEX and PXIL. Exchanges in India have twelve years of experience and are continuously evolving. These exchanges have come a long way since their inception, almost 44.36%  of short term transactions of electricity is done via power exchanges, but it still remains significantly low (4.56%) compared to volumes of various other kinds of electricity transactions in total electricity generation.

All-India Energy Demand Shows Signs of Recovery

India Ratings and Research (Ind-Ra) has published the June 2020 edition of its credit news digest on India’s power sector. The report highlights the trends in the power sector, with a focus on capacity addition, generation, transmission, merchant power, deficit, regulatory changes and the recent rating actions by Ind-Ra. In June 2020, the all-India energy demand contracted 10.9% yoy for the fourth consecutive month to 105.6 billion units, while energy supply also decreased 10.9% yoy, resulting in the energy deficit remaining at 0.4% (June 2019: 0.5%). The power demand declined for June 2020, amid the COVID-19 led lockdown, on account of a decline in commercial and industrial demand from major manufacturing states such as Maharashtra (down 17.1%), Gujarat (down 10.2%) and Tamil Nadu (down 10.3%). The energy demand is showing signs of recovery as the decline in power demand narrowed in June 2020 (down 10.9%; May 2020: down 14.9%; April 2020: down 22.3%) due to the gradual lifting of lockdown for certain economic activities and an increase in domestic consumption with the extended summer season. The energy demand also showed a 2.9% mom improvement over May 2020. 

Change-In-Law Payments a Rs 4,000 Cr Booster For Solar

Recent commencement of Change in Law1 payments by state power distribution companies (discoms) and Solar Energy Corporation of India (SECI) for Goods and Services Tax (GST) to solar power projects, comes as a shot in the arm for the sector. Together with safeguard duty (SFD) reimbursements, which also qualify under ‘Change in Law’, the payments will lead to Rs 4,000 crore cash inflow for the sector. This can restore project returns by as much as 220 basis points (bps) and is positive for credit quality. CRISIL had, in its July 9, 20192 press release, said that the imposition of SFD on import of solar cells and modules had increased the implementation cost of ~5.4 giga watt (GW) projects by as much as 15% and compressed the returns of developers by 160 bps. Add to this the hike in GST levy on modules and balance of the plant, and returns reduced by a further 60 bps. While the Central Electricity Regulatory Commission (CERC) was quick to recognise the SFD imposition as a Change in Law event, uncertainty prevailed over the timeliness and mechanism of its reimbursements.

CERC Directs Pranurja Limited To Comply Requirements of Power Market Regulations

Central Electricity Regulatory Commission  recently passed an order on granting registration to establish and operate a Power Exchange in accordance with the Central Electricity Regulatory Commission (Conduct of Business) Regulations, 1999. Pranurja Solutions Limited, has filed the petition against Indian Energy Exchange Limited (IEX) and Power Exchange India Limited (PEIL). Commission  decides that further action under Regulation 16(v) and Regulation 16(vi) of the Power Market Regulations 2010 can be taken only after the company meets the requirements of Regulation 19 of the Power Market Regulations 2010. Accordingly, the Pranurja is directed to comply with the requirements of Regulation 19 of the Power Market Regulations 2010 within a period of 8 weeks.

India to Have 60% Power Capacity from Renewable Energy by 2030

India can integrate more than 30% of wind and solar in its power system, while still maintaining security of supply and without raising the total economic costs of its electricity system, according to a new report by The Energy and Resources Institute (TERI). The report also identifies a number of strategies to achieve this. The report, titled ‘Renewable Power Pathways: Modelling the Integration of Wind and Solar in India by 2030’, was launched on Tuesday along with the report titled ‘Bending the Curve: 2025 Forecasts for Electricity Demand by Sector and State in the Light of the COVID Epidemic’ by Shri RK Singh, Honourable Minister of State (IC) of Power and Renewable Energy, and Minister of State, Skill Development and EntrepThe report launch, which was followed by a technical discussion, was part of the ‘Virtual Sustainable Action Dialogue on Energy Transition’, a pre-event of the World Sustainable Development Summit, TERI’s annual flagship event that is to be held in February 2021.reneurship, Government of India.

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