Industries facing Power Issues in Maharashtra

Thane Small Scale Industries Association (TSSIA) has cited high power tariff as a reason for a drop in industrial output and urged chief minister of Maharashtra State to review the charges and taxes levied for power consumption.

TSSIA has said that that power tariff in Maharashtra is nearly 40% higher than neighboring states like Andhra Pradesh, Gujarat and Karnataka. The association has written a letter to the CM asking him to cut power charges in Maharashtra to match the charges levied in other states. TSSIA has pointed out that industries in Thane have to shell out nearly Rs 9 per unit as against the average of Rs 4 levied as power charges in neighboring states. There are nearly 6,350 industrial power consumers in Thane belt. Of this 6,000 are low tension power consumers while the remaining are high tension power consumers.

Sujata Soparkar, vice-president, TSSIA explains that one of the reasons why industries are moving out of Maharashtra is the higher power cost. Also the higher power tariff will affect Maharashtra when it competes with other states on the “Make in India” theme”. Besides higher tariff, the industries are also upset with frequent disruption .

In response, MSEDCL [Maharashtra State Electricity Distribution Company Limited] has proposed a tariff cut for industrial and commercial users by 5% and 3% respectively. To balance this out, residents of Thane, Navi Mumbai and the eastern suburbs may soon have to pay more for power with a proposed 25-38% hike for domestic users.

The proposal, however, will first have to be approved by the Maharashtra Electricity Regulatory Commission, which will conduct a public hearing from March 18 to April 10 across the state.

Source: http://timesofindia.indiatimes.com/city/thane/High-power-rates-in-Thane-may-hit-Modis-ambitious-Make-In-India-plan/articleshow/45933328.cms

http://www.hindustantimes.com/mumbai/power-bills-of-navi-mumbai-thane-locals-likely-to-rise/article1-1317910.aspx

 

I don’t think power tariff will be the only issue that makes Maharashtra industries less competitive than its peers outside the State.

To help solve the power tariff, the government needs to take a much broader view of power costs. Instead of burdening the common man, the government can look at the following options:

1. Push Energy Efficiency schemes in the industries; thereby decreasing the consumption of power.

2. Implement Open-Access in a way that it can be implemented easily and faster

3. Transmission and Wheeling charges for renewable energy should be decreased as much as possible. This will encourage industries to either set up their own power plants or buy cheaper power from renewable energy plants; on per unit basis; located across the State

4. In industry cluster areas, the government should investment for micro-grids

5. Promote solar rooftop

6. Promote green building for new industries and retro-fitting for existing buildings

The government can use a combination of less costlier debt and tax incentives to assist the industries implement / take advantage of the schemes which are not only environment friendly but also decrease use of energy and lower costs of power. This lower income [from taxes] for the government can be balanced with growth in complementary businesses in the state- renewable energy, energy efficiency technology and services.

Schemes such as rooftop solar, micro-grids and renewable energy plants transmitting power to industries can be implemented without any capex from industries. Investors can be invited by the State to supply power to these industries with land support, lower transmission and wheeling charges [quite high currently] and assist in easier implementation of open access projects [open access is on paper but seems very difficult to implement].

These steps will also help decrease the power cuts that we experience across the State.

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India’s push on Electric Cars and Electric Car Insights from USA

According to Mint, India may spend Rs.1,400 crore over the next two years on incentives and subsidies for makers and buyers of electric vehicles as part of an effort to have at least six million electric vehicles on the country’s roads by 2020.

The scheme is also expected to improve India’s standing in global climate change discussions. In addition, the scheme can help reduce the country’s carbon dioxide emissions by up to 1.5%. In the next two years, the government hopes the policy will facilitate sales of at least 800,000 electric vehicles, led by the sale of two- and three-wheelers.

Besides, the government will also create a fund of at least Rs.600 crore from the auto cess that it gets for every vehicle sold in the country.

While India waits for this push, I managed to touch base with a friend [currently using an electric car] based in California, USA to learn what kind of incentives he enjoys from the government to use an electric car.

Mr.Amit Ailiani stays at Fremont, CA and travels to Suunyvale CA everyday [5 days a week] for work.
His earlier car was Volkswagen Rabbit (Golf). Volkswagen Rabbit (Golf) gave 22 miles per gallon and on average in US gas costs 3 dollars per gallon. Amit’s commute is 22 miles one way and hence cost per day is approximately 6 US dollars.

He has recently bought an electric car, Nissan Leaf – Base S Model. According to him, the car is just for the commute and near by shopping. It can easily fit 4 people and is absolutely noise free.
The car does not need any high maintenance like regular oil change. It just required brake change and tire rotation.

One interesting point was that he leased Nissan Leaf instead of buying it. The rationale behind this was that like computers, the electric car industry will see technology get oudated fast with more powerful cars coming in the next couple of years.
There are several programs for e.g. you can lease a car based on number of miles that you will drive per year. The options are 12,000 or 15, 000 miles per year. Depending on your commute distance you can opt for miles per year.
The total cost per month for leasing electrical vehicle is in the range 180 to 220 USD. This has been very attractive for several families where you can lease a new vehicle in an affordable price range. For most families in US 300 USD is the average cost of gas/petrol per month. So cutting down on gas is equivalent to lease price for Nissan Leaf

The down payment for the car was 2500 USD which was given back by US government; as a part of the incentive program to encourage use of electric cards. So after rebate the down payment was ZERO. There are extra costs if you have in built GPS and musics systems.

The driving range for Nissan leaf is 90 miles and so it will fit ones needs if your work commute back and forth is within 90 miles.

There are additional incentives by US government such as
1. Free installation of the charger at home
2. Discounted rates for electricity
3. One also gets a special sticker for the car which authorizes you to drive in carppool lane. The carpool lane in US is designated for commuters where they share ride (atleast two in one car) and during peak hours can drive in left most lane (fastest lane).

Nissan Leaf

On Car Charging, Amit said that charging stations are coming up everywhere like gas stations. He has charging station at home and at work. “At work you have to share it with co-workers so it can be challenge to charge your car every day. If you come early you can get in line”.
It takes 4 hours on 220 Volts to completely charge the vehicle. So it is basically a commuter car where you charge it overnight and is ready to use in the morning.

Due to limitation on driving range sometimes Amit has to stick to his planned route.

On the Cost Front: It usually takes 3.5 dollars to charge Nissan leaf. So if one compares this with gas cost you can get 90 miles in 3.5 dollars; whereas his old car would have given him the same number of miles in approx. 12 dollars.

 

Learning for India:

While we can have countless debates on the incentives that the government can provide to encourage use of electric cars in India, our experience from wind and solar teaches us that the aim should be to make the industry self-sustainable asap.

Some of the points that India can possibly look at initially to encourage electric cars:

1. Lower Registration Costs for electric car

2. No Toll Charges [across India] for electric cars

3. Yearly Income Tax Rebate for Electric Car Buyers

4. Project Tax Rebates for Developers building electric charging stations in Malls, Commercial Complexes, and Residential Buildings

But more importantly if the industry has to become self sustaining then the required infrastructure needs to be built. One of the most important of these being electric charge stations and for that we need continuous 24*7 power supply.

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Solar Mandatory for Bldgs in Haryana. Will it Work?

The Haryana government recently announced that it will be mandatory for all buildings on plot size of 500 square yards or more to install rooftop solar power systems by September 2015.
The order will be applicable to private bungalows, group housing societies, builder apartments, malls, offices, commercial complexes, schools, hospitals — any building, new or old, that meets the plot size criteria.

The government had offered a 30% subsidy on installation costs on “a first-come-first-served” basis. This subsidy may now be reduced to 15%, as per the latest reports, based on the announcements from MNRE.

The minimum solar power capacity to be installed is 1 kilo Watt or 5% of a building’s connected load, whichever is higher. Failure to install the solar panels by September would attract penalties between Rs 10,000 and Rs 10 lakh, officials said.

Meanwhile, the State is also working out the modalities of connecting rooftop panels with the power grid, through the net-metering system.

So what does it mean for India’s Solar Industry?

From outside, this seems to be good news for India’s solar industry; creating a new market for the industry.

Some points to be noted:
1. Does the State think that such a short term push will help develop the solar infrastructure in the State? This short deadline may also encourage fly-by-night operators. Maybe the State could have prepared a list of authorized solar vendors/epc/installers; keeping a kind of confidence to the customers.

2. 15%-30% subsidy sounds good on paper. On the ground, it will just add another paper-work and admin burden on either the end user or the installer [Either the end user will apply for subsidy themselves or the installer will take on itself the task of applying for subsidy]. Also the “first-cum-first serve” basis may only add to unethical practices.

If the end-customer has to take the responsibility of the subsidy; then it will create a new market for agents/in-between players who will assist these solar owners to get subsidy from the government.

The State can also look at direct tax incentives for solar installations.

3. Net-metering clause will also bring in other challenges. Rate at which discoms buy additional power needs to be analysed. Also to solve technical challenges, the State could have initiated net-metering demo projects on government buildings.

4. The State is looking at a target of 50MW. But pushing such targets or clauses on the end -customer makes me little uncomfortable. Yes, the policy can make it mandatory for new buildings or government buildings, but then pushing private companies/families into this suddenly can create an uncomfortable environment.

5. What steps are to be taken if there is not enough space to put the solar plant in the building? What happens when the solar plant is not feasible for that particular building?

For now, an education drive will be useful to help people understand the process of buying/installing a solar power plant.

This also shows how important is energy security for States. We may see more such push from other State Governments. But I hope it is better planned and implemented.

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Negative News for Solar in Mumbai

The solar industry received a little shock when the Mumbai Municipality body, BMC, approved the policy of allowing Hotels and commercial buildings in Mumbai to house roof top eateries.

The requirement for licenses, like that for serving liquor, will be the same as for bars and restaurants. Rooftops of hotels that have consumed their FSI (floor-space index) cannot do any construction or cooking but can use the rooftop only as serving areas.

The hospitality experts have welcomed the decision, saying that in a city where scenic views of the sea can be had from high-rises, rooftop restaurants will boost tourism and rejuvenate the hotel industry. But for the solar industry, such policies can initiate a negative trend of converting rooftops into commercial properties, thereby creating a valuation on such areas.

With such a policy, hotel and commercial rooftop owners may find it more attractive to initiate business on rooftops rather than use solar to save on electricity costs.

What would have been more encouraging is that BMC could have asked for a raised solar structure on the hotel rooftop, below which a commercial eatery can be started. This could be a positive for both the sectors– restaurants and also solar.

Though solar is not so needed in terms of access to electricity for Mumbai buildings, commercial [including hotels] are looking at solar on rooftops to cut their electricity costs, which has been rising steadily over the last few years.

News source: Times of India

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Indian Power Sector Buzzing

There seems to be a lot of focus on India’s Power Sector these days with the government seriously considering changes [good or bad can be analysed separately] to finally put this sector on the right path.

Recently the Power & Coal Minister of India, Mr. Piyush Goyal has said that the government is looking to separate the content from the carrier. The objective is to to fix electricity distribution space; an often neglected part of the Indian power sector.
The government is making necessary amendments to the Electricity Act to encourage greater competition in the distribution sector. Gradually the end users will be able to select their power distribution firm. But challenges still do exist on the policy front and on the technically implementing these concepts on the ground.

At the same time, MNRE has also announced that it is planning to raise the mandatory solar RPO requirement for the power distribution companies to 10.5 per cent from the current 3%.
In addition, the government is working on a renewable energy policy or renewable energy act.

Meanwhile in yet another development, update is that the government is likely to revise power contracts between generation and distribution firms to lower electricity tariffs from plants that will run on coal from captive blocks. This will happen after allocation of the coal blocks.

While I am not an expert on the coal blocks story, the focus on the power distribution side is applauding. This can bring about competition in retail power segment and slowly bring a change in attitude on the topic of energy efficiency among consumers. How this impacts the solar rooftop space will be clear only later when the exact changes in the Electricity Act are known and analysed.

The RPO news seem exciting, pushing discoms to further build their own renewable energy projects giving a boost to Indian power/solar equipment companies. The other option is to buy RECs from the market. Seems like a good move but don’t forget to consider the situation of investors who have burnt their fingers in solar REC projects.

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Diesel Deregulation & Solar

The new Indian government has deregulated the diesel prices in the country. So the diesel prices now, in India, will depend on global crude prices.

The first effect of this step was a decrease in the diesel prices by approximately in Rs.3.

This has got a lot of cheer from the Indian automobile industry. The last few years has seen the government slowly removing subsidies on diesel; thereby slowing down the sales of diesel engine cars in the country.  This new step that has resulted in decrease in the diesel prices has shown some encouragement in the industry.

Some more impacts that will be seen on a shorter term are:

  • Most of the agricultural equipments (tractors, harvesters and water pumps) run on diesel, and diesel getting cheaper will eventually helps in bringing the price down.
  • The whole transport industry (trucks and buses) runs on diesel and with pricing going down, food prices and travel fares are expected to go down.
  • Government’s subsidy bill will be go down to Rs 22,000 crore as last year govt. paid Rs 85,000 to compensate oil companies while for this year it is expected that govt will pay Rs 63,000 crore.
  • The govt can further save Rs 10,000 crore

 

But is this happiness short-lived and what impact will this create in India’s solar industry?

The diesel prices, related to the crude oil space, will have its own up and down w.r.t prices; more up than down if the past trends are an indication.

On the off-grid solar side, this can create a short term and a long term impact. On the shorter term, diesel prices having decreased now, will shift the focus away from power tariff saving. Commercial and industrial entities will now show lesser interest on the solar [a lot of solar off-grid is sold to replace spiraling diesel based power costs].

But the story can take a turn when the market takes the diesel prices upwards.

An “increasing prices” trend will then encourage entities to look at off-grid solar.

On a long term, the ever changing back-up power costs [in some areas this is a major costs due to electricity cuts] will lead to an unpredictable situation w.r.t costs. To help streamline the costs into a more predictable trend, entities may be encouraged to consider solar.

I had a quick look at the historical diesel prices in India and the trends; on a long term average;  show increasing prices except during 2008-09 when global recession lead to a fall in commodity prices.

http://www.indexmundi.com/commodities/?commodity=diesel&months=180&currency=inr

The other question is, when diesel prices move beyond a certain limit will the government intervene on political grounds? I believe that this will also happen. The Indian inflation is quite dependent on diesel prices and in an election year the government will be forced to intervene.

 

Overall, deregulation of diesel prices is a good sign for solar development in India, on a longer term.

This development will also help other cleaner technologies such as hydrogen fuel to be more economical in a market driven economy.

Diesel impact on other sectors: Source Business Standard

 

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Global Solar Trade Learning from Taiwan

PV Taiwan is one of Asia’s premier international PV exhibitions. Taiwan being a solar manufacturing hub; this exhibition serves as a perfect sourcing avenue for the world market.

The show was from 22nd October to 24th October 2014; with some 160 exhibitors and 8000 visitors.

Inspite of this expo providing a great opportunity to understand the costs of global solar value chain and avenue for raw material purchasing; I hardly saw any Indian companies / representatives in the exhibition.  Maybe it was because of Diwali [Hindu New Year] or is it because the Indian companies prefer to purchase raw materials from China.

I had some pretty interesting meetings with senior management of some Taiwanese companies; thanks to the arrangements done by TAITRA; Taiwan External Trade Development Council.

Some learning from the event:

1. The Taiwan solar market is manufacturing based; with more than 95% of the manufactured goods meant for exports.

2. The major markets for Taiwanese goods have been Europe, USA and China.

3. With the recent anti-dumping duties on Chinese and Taiwanese companies by the US; the Taiwanese companies have started focusing on other countries as well. Japan’s solar focus has come at the right time for the Taiwanese export market. Ease of cultural understanding and not a great distance has made Japan one of the favorites for Taiwanese solar companies.

4. Middle East, India, Eastern Europe are also being looked at.

5. Some Taiwanese solar companies had initiated steps to manufacture solar panels in the US; a approximately 6 GW / year market. But with the anti-dumping scheme; Taiwanese module companies cannot import cells [possible with duty] from Taiwan [and even China] into their US factories; thereby creating an unpredictable environment on these panel factories.

The US is expecting these panel manufacturers to import cells from other countries or buy from US companies.  This however changes the pricing dynamics of many panel manufacturers.

6.  This has left the panel manufacturers with options of manufacturing in Mexico or Canada; leveraging NAFTA. Canada is on the higher side of labor costs; so Mexico seems to be the best option for now.

7.  Other countries can also be looked at; maybe Malaysia due to cultural proximity and already established supply chains.

8. There seems to be a coordinated efforts between solar cell and module companies to join hands and manufacture products as per the market needs w.r.t generation potential and price expectations.  The entire solar value chain is coming together with the objective of reaching the market objective.

9. R&D is an important focus for Taiwanese companies and energy storage is the next big target.

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PV Taiwan Expo 2014

I will be visiting the PV Taiwan Expo from 22nd -24th October 2014; at Taipei.

It will be nice to meet solar professionals over a cup of coffee, glass of wine or mug of beer.

Please let know: bharat.vasandani@energetica-india.net / bharatvasandani@gmail.com

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Time of new Power Policy from Telangana?

I just came across this news in the Economic Times that frequent and long power outages are forcing industries based in Telangana to reconsider their proposed incremental investments, expansions and greenfield projects in this new state of India.

“The situation on the ground is more alarming since power cuts to the industry are much more than 24 hours a week in reality,” said a cement manufacturer with a large facility in Nalgonda district of Telangana.

At a time when its neighbour Andhra Pradesh is supplying uninterrupted power across sectors, Telangana has imposed 4-12 hours of daily power cuts on farmers and domestic consumers, and four-day-a month production holiday on industries. Against a demand of 161 million units (mu) a day , the Telangana government is able to supply only 137mu.

This opens up opportunities in Open Access.

But the state that is unable to buy electricity from power-surplus states because of grid connectivity issues. “We are bleeding as we are operating our units on diesel generator sets to meet the delivery schedules promised to our clients,” said the chief executive of a foundry on the outskirts of Hyderabad. “The state government power agencies are neither ensuring uninterrupted power supply nor allowing us to buy power from market through open access.”

The industry is asking for medium and long term plans from the State. The first focus is improvise the process of Open Access so that the industries can buy power from third parties.

The Open Access may also not be able to provide solution on a quick basis and across all the cities of the State, due to grid connectivity issue as highlighted in the news.

There can be a two edged sword kind of solution here:

1. Decrease energy consumption by using cleantech concepts and technologies

2. Formulate short, medium and long term solutions to improve power supply

 

1. Decrease Grid Power Consumption

A. Encourage use of green buildings, green products and energy efficiency technologies

B. Cutting down subsidies in electricity tariff

C. Encourage use of solar and other off-grid technologies

The current emphasis on diesel gensets for basic power needs will encourage solar installations due to lower long terms costs and reliable power supply.  In industries, a hybrid solution of solar-diesel system can work as well.

2. Solutions to improve Power Supply

A. A holistic power policy from the state encompassing conventional and renewable energy needs to be on the agenda

B. Grant and improvise Open Access process in the State

C. Modernize the T&D infrastructure

 

It maybe be sooner than later that we will hear on solar / wind focus or policy from the Telangana State. Though, mentioned earlier, I would suggest a holistic approach to the power situation in the state rather than piece meal focus from different teams in different directions.

Nevertheless, the current situation in the State provides ample business opportunities for solar companies.

 

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InterSolar India Awards 2014 – India Innovates

We, a jury of 4 members, finally closed the InterSolar India Awards 2014 from a final list of 10 finalists across categories of Utility Scale Projects, Industrial Projects and Off-Grid.

I am not allowed to divulge the details and we will all certainly need to wait for 18th November 2014 to know the winners.

But while judging the projects, one thing that came out very sharply, is that this year we saw projects using not technology advanced products; but innovative engineering that is making a difference on the ground. The innovation is coming from combining different technologies, working with the nature, technical engineering that better the results [generation], solving social issues with use of cleantech, etc.

The judging process was in itself a learning experience; showcasing the understanding that Indian engineering companies have developed over the last few years in the solar power space.

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