Thermal Energy Newsletter April 2011

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Thermal Energy Newsletter


April 2011 Issue


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IPP News2

Contents

Fuel Related News3

4 Policy and Regulatory News

Sector round up and key data1

6 Renewable Energy News

5 Equipment & Transmission updates

7 UMPP News


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Thermal Energy NewsletterSector Round-up & Key Data

PEAKDemand - Supply

MonthPeak Demand

(same mnth last yr)

Deficit %

Mar-10 118472 ( 109492) -13.3 ( -11.6)

Apr-10 121220 (110958) -15.1 (-12.3)

May-10 116757 (107920) -12.8(-11.8)

June-10 116505(111662) -12.7( -13.6)

July-10 113388 (108930) -12.1(-12)

Aug-10 114737 (116281) -10.7(-14.6)

Sep-10 117314(115116) -8.9(-11.7)

Oct-10 118533(115432) -9.4(-12.1)

Nov-10 114234(109611) -8.7(-12.2)

Dec-10 117409(112505) -10.5(-12.5)

Jan -11 122470 (112505) -11.1(-12.5)

Feb -11 120536 (113505) -10.2(-12.5)

MonthEnergy Demand

(same mnth last yr)

Deficit %

Mar-10 76493 ( 69595) -11.7 ( -10.9)

Apr-10 75321 (67992) -14.6 ( -11.2)

May-10 74613 (68471) -11.4(-8.8)

June-10 71391(69508) -9.4(-8.4)

July -10 70076(67232) -8.3(-8.9)

Aug -10 70952(73273) -7.5(-10.9)

Sep-10 68032(68994) -5.9(-9.6)

Oct-10 74162(69714) -5.9(-9.4)

Nov-10 64417(62944) -6.5(-8.9)

Dec-10 71363(62766) -8.2(-10.7)

Jan-11 75836 (70306) -7.6(-10.7)

Feb-11 69501(64306) -7.8(-9.7)

ENERGY Demand -Supply(in MWs) (in MUs)

All India All India

Category Capacity (mw)

Capacity at end of 10th plan 1,32,329

Capacity as of 28-02-2010 1,71,926

Added in the 11th plan till date 39,597

11TH Plan Capacity addition update

Capacity Break up ( 28-02-2010)

Category Capacity (mw)

Thermal 1,11,324

Nuclear 4,780

Hydro 37,367

R.E.S 18,454


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Thermal Energy NewsletterSector Round-up & Key Data

State PeakDemand Peakmet Deficit%PeakDemand Peakmet Deficit %

U.P 10856 8563 -21.1 11003 8951 -18.6

Chttgh 2819 2703 -4.1 2719 2535 -6.7

Punj 9786 7407 -24.3 5406 4910 -9.2

Guj 10406 9515 -8.6 9671 9028 -6.6

M.P 7490 6415 -14.4 8728 8068 -7.6

Delhi 4502 4408 -2.1 3418 3306 -3.3A.P 12168 10880 -10.6 11250 11232 -0.2

T.N 11,125 9813 -11.8 11377 10436 -8.3

Katka 7942 6897 -13.2 8137 7618 -6.4

Mah 19388 14664 -24 19530 15479 -20.7

Key states PEAKdemand supply situation - Snapshot(2009-10) (feb 11)

(in MWs)

Source : CEA

Key states ENERGY demand supply situation - Snapshot (in MUs)

StateEnergy

DemandDemand

metDeficit

%Energy

DemandDemand

metDeficit

%

U.P 75930 59508 -21.6 6042 5313 -12.1

Chttgh 11009 10739 -2.5 841 826 -1.8

Punj 45731 39408 -13.8 2615 2472 -5.4

Guj 70369 67220 -4.5 5804 5556 -4.3

M.P 43179 34973 -19 4595 3552 -22.8

Delhi 24277 24094 -0.8 1549 1548 -0.2A.P 78996 73765 -6.6 6665 6595 -1.1

T.N 76293 71568 -6.2 6589 6122 -7.1

Katka 45550 42041 -7.7 4676 4459 -4.6

Mah 124936 101512 -18.7 10982 9258 -15.7

(2009-10) (feb-11)

Deficit of 10% 15 % : Deficit of 15% & above : Deficit of 10% 15% : Deficit of 15% & above :


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Sector wise dispatch of coal : Power Trading Data

0

1000

2000

3000

4000

5000

6000

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1

2

3

45

6

7

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Volumes (MU's) Day ahead Price (Rs/ Kwh) Bilateral rates (Wght. Avg )

Rs./Kwh Mus

Sector Round-up & Key Data

(2009)

Month Average IEX Prices (Rs/Kwh)

IEX Traded volumes

(mus)

Nov-2010 2.04 833.5

Dec 2010 2.47 1121

Jan - 2011 3.34 1205

Feb - 2011 3.68 1163

Below are the Monthly IEX prices and UI prices :

(2010)

(mn tns)

Type 2009 CoalDispatch(mt)

% annualdispatch

2010 CoalDispatch(mt)

% annualdispatch

Power 326 81 332 80

Steel 20 5 22 5

Cement 7 2 6 2

Other .Industries

7 2 9 2

S&MIndustries

41 10 46 11

Total 401 415


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Thermal Energy NewsletterIPP News PTC's Athena leads race for UP Power 3,000 mw tender

PTC - Athena Chhattisgarh has emerged the front-runner among the six companies that had bidsfor a tender floated by UPPCL for the purchase of 3,000 mw power for 25 years starting in 2014.UPPCL accepted PTC as the L1 offer to supply 300 mw of power at an average price of R 3.324

The next bidder (L2) is Anil Dhirubhai Ambani's Reliance Power, which has offered to sell 2,456 mwof power at an average price of Rs 3.702 per unit. Though Reliance has offered to sell the quantity of power that is closest to what the UPPCLrequires, its price is not the lowest and hence the bid evaluation committee has decided to comparethe rates with other states before finalizing anything further. The other bidders, Jaiprakash Power has offered 200 mw at Rs 3.900 a unit, Lanco has offered tosupply 680 mw at Rs 4.283 per unit, and two other Power Trading Corporation companies, KVKNilachal Power and Ind-Bharath Power have offered 160 mw at Rs 4.413 a unit and 200 mw at Rs4.810 a unit, respectively.

NCC - Krishnapatnam project Hopes to achieve financial closure by May forthe Rs 7,000-crore, 1,320-MW thermal powerproject it is setting up in partnership withGayatri Projects at Krishnapatnam . May dilute stake to a private equity player , tomeet the equity requirement for some projects. PFC and REC have agreed in principle to pumpin Rs 3,200 crore, which is part of the Rs 5,200-crore debt portion

For the rest, NCC is negotiating with SBI andICICI Bank. NCC picked up 55 per cent stake in Nelcastthermal project at Krishnapatnam for Rs 150crore. The coal linkage for the project has beenachieved with Coal India Ltd agreeing to re-allotthe coal initially meant for 1320-MW thermalproject at Sompeta.

Ispat Industries may buy stake in JSWEnergy's 300 MW Ratnagiri power project Ispat Industries is taking it's first steps towardsbackward integration to turnaround thecompany, as announced by JSW Steel at the timeof the Ispat's acquisition in December, 2010. Sources said, Ispat is close to buying 26% stakein JSW Energy's 300 MW Ratnagiri power projectfor a little over Rs 100 crores.This will allow Ispat to use the electricity from

the plant for captive consumption to producesteel at it's Khopoli plant. Sources say Ispat Industries may buy a 26% stakein an SPV (special purpose vehicle) which will own300 MW of JSW Energy , the rest of the 74% willbe held by JSW Energy. Ispat's cost of electricity is at Rs 6/unit and willbe reduced to Rs 4.5-4.8/unit post synergies

Other NewsFinancial Closure

DB Power - ChhattisgarhDB is developing a 1,200-mw coal-fired megapower plant at an estimated cost of Rs 4600crore. Debt portion amounts to 3500 crs It is raising 75% of the project cost as debt.The company hopes to sign the credit deal inthe next two weeks, with SBI as the sole debtarranger and syndicator DB Power is close to raising Rs 2,625 croreto part-finance its mega power project in

Chhattisgarh. The interest rate is likely to be 12 %. The firm is little tying up with eight financialinstitutions with LIC, Union Bank of India andL&T Infrastructure and Finance among them.

Financial Closure


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Thermal Energy Newsletter No-Go deadlock delays coal block auction

Six months after Parliament approved the crucial amendment to the Mines and MineralsAct, 1957, for competitive bidding of coal blocks, an inter-ministerial committee is stillstruggling to finalise the guidelines for the bidding regime.

The environment ministry's controversial 'No-Go' policy has made auctioning difficult. While around 50 blocks have already been identified for auction, MoC does not yet knowhow many of them are falling in the No-Go areas or how many are to be freed and in howmuch time. No block can be put up for bidding until the policy on No-Go becomes clear. Competitive bidding will replace the current practice of allocating blocks to the privatesector for notified captive use based on recommendations of an inter-ministerial committee.

JSW Energy and GVK may submit fresh bids for acquiring two coal assets put on the block by Hancock Coal JSW Energy and GVK Power and Infrastructure will have to submit fresh bids for acquiring two coal assets put on the block by Hancock

Coal as the Australian firm now wants joint bids for the assets, sources said. Hancock Coal is selling Kevin's Corner and Alpha Coal, both located in Australia's Queensland province, as it expects good valuation for theassets. Some Chinese and Japanese power generation companies are also among the shortlisted bidders. The two mines have an estimated 7.9 billion tonnes of thermal coal, according to the company's website. Hancock is expected to finalise one buyer by the end of this month. Kevin's Corner and Alpha Coal are located close to the mine that AdaniEnterprises acquired last year from Linc Energy. Some sources say that The valuation could go over $4 billion considering the asset size .

Lanco Infra concludes buyout of 2 Australian coal firms Lanco Infratech Ltd has completed the buy out of two coal mining companies - Griffin Coal Mining Company Pty Ltd and Carpenter Mine

Management Pty Ltd, that entails a total structured investment of A$730 million, including upfront payment of A$480 million. Lanco said that this is a significant part of the company strategy to secure fuel supplies for the company's expansion and new projects. The deal is structured in such a way that there is an upfront payment of about A$ 480 million. This will be followed by a payment of A$100million after two years and A$ 150 million after four years. These companies have total estimated reserves of about 1.2 billion tonnes. And of this, about 700 million tones (MT) is extractable. Atpresent, these mines produce about 4.5 MT per annum and this would be ramped up to 5.5 MT per annum soon. Initially, these mines wouldcontinue to supply coal to current buyers in China and Japan.

Fuel Related News


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Thermal Energy Newsletter Likely changes in Indonesia Coal Policy

Indonesia may be looking to ban the exports of low-grade thermal coal by 2014 , somethingthat could have significant impact on the Coal Market. From 2014 onwards, Indonesia is contemplating only exporting value-added coal of more

than 5,600 kilocalories (kcal). As the world's largest thermal coal exporter, Indonesia has often found it difficult to procureenough supplies for domestic consumption. Low-quality coal, of between 4,800 and 5,800 kcal, constitutes a significant portion ofexports out of Indonesia and, considering the country accounts for about 30 per cent of theglobal thermal coal supply, an export ban could reduce worldwide supplies by at least 10 percent

Governor's powers: Indiabulls challenges interpretation in HC Indiabulls, which is setting up a 2,640-MW thermal power station in Amravati district of Vidarbha, has challenged the prevalent

interpretation of the Governor's powers to ensure equitable development of the state. The company is facing people's agitation against its project, mainly on the ground that the project will usurp water from Upper Wardhadam meant for farmers. A petition has been filed by the Backlog Removal Committee, a citizen's body, challenging the water supply. Thecommittee has cited the Governor's directives to remove Vidarbha's backlog, which also includes irrigation backlog.The company said the Rs. 14,000-crore project would provide 1,200 MW power to the state at Rs. 3.26 per unit and it has already spent Rs.1,250 crore on it. The government has assured to provide 87.6 million cubic metres of water to the project from the Upper Wardha dam. A Petitionercommittee had argued last week that the Governor's directives are of constitutional nature and are, as such, binding on the stategovernment. They said Vidarbha's irrigation backlog is 68.47 per cent and Amravati has a backlog of 70,000 hectares. They claimed thatsupply of water from the dam will reduce Vidarbha's irrigation by 23,219 hectares.

They had also said that Prime Minister Manmohan Singh had announced a package for Vidarbha's crisis-ridden farmers, which included onefor irrigation. So, supply of water meant for irrigation was also a violation of the PM's package. The company has now filed a separate petition, challenging the interpretation of the Governor's powers. "The Hon'ble Governor has nopower or authority to issue directives in the nature and scope as is being interpreted. The petitioner submits that if at all it is a case thatsuch directions have been issued by the Governor to the State Government and its functionaries, it will be a case where the Governor hasbeen wrongly advised that he has powers to do so. It is submitted that the role of the Governor is only a supervisory role," the petition said.

Policy News


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Equipment Orders and Contracts

Power Plant/ Owner Capacity (mw) Fuel Contractor Total Order Price&Price per MW (Rs)

Scope of Work

Adani Power, (Tiroda and

kawai )1320*2 Coal BGR Rs 30 Crs

design, engineer, manufacture, supply and commission two

Condensate Polishing Units (CPU)

Gujarat SEC 375 Gas L&TRs.1100 /

3crs / MW

The engineering, procurement and construction contract includes

design, supply, installation and commissioning of the complete

power plant on a turnkey basis

Equipment& Transmission News Update of New local Equipment Manufacturing Units: L&T -Mitsubishi : This is the only JV out of the five companies that has inaugurated its facilitiesand has in fact started production at its plant located at Hazira, Sura. It plans to manufacture BTGwith an annual capacity of 4000 MW each.

Alstom -Bharat Forge: expected to start operations facility in Mundra SEZ by June 2013. Thecapacity of the facility is expected to comprise of Turbine & generators worth 5,000 MW. Toshiba-JSW : Expected to complete by August 2011. The plant carries an annual manufacturingcapacity of 3000 MW. Gammon- Ansaldo: Probable date of completion of facilities at Tiruchy in Tamil Nadu is December2012 for the first phase of 2000 MW and December 2014 for an additional 2000 MW. Thermax - Babcock & Wilcox: Annual capacity of 3,000 MW. As of now, negotiations forprocurement of machinery for manufacturing facilities are in final stages. Completion of facilities isplanned by end of 2011


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Thermal Energy NewsletterRenewable Energy News Government considering a ban on import of equipment for projects under the National

Solar Mission The government is considering a ban on import of equipment for projects under theNational Solar Mission. The move will benefit domestic solar equipment suppliers, but project

developers say it could prevent the government from achieving its target of 20,000 mw ofsolar power generation capacity by 2022.Over 70% of plants being set up under the first round of the mission are based on importedequipment . There is an active consideration within the government that it should either ban or furtherrestrict import of equipment for solar projects. The ministry of new and renewable energy said that at least sourcing cells and modulesfrom Indian suppliers can be looked at.

Gujarat contemplating fines for delayed solar projects Gujarat Energy Development Agency said that there may be fines imposed in the projects where there were inordinate delays . Five of six projects that agreed to start operating by 2011 were delayed, including one by New Jersey-based Zeba Solar Inc. Gujarat state has led India's nascent solar industry, awarding licenses for 959 megawatts to developers seeking a foothold in a state-subsidized renewable energy market. The first 48.5 megawatts were required to start operating by Dec. 31 . How Gujarat deals with delayed projects sets a precedent for India's Solar Mission, a nationwide program that calls for 20,000 megawattsof capacity by 2022. Lanco Infratech Ltd, the Hyderabad-based developer that completed its 5-megawatt allotment on Dec. 20, is the only company that metthe deadline. Five projects awarded to Azure Power of New Delhi, Zeba Solar, Germany's Dreisatz GmbH and MI MySolar24 Ltd. weren'tcompleted. Azure, which built a 2-megawatt plant in Punjab, said the first phases of two plants were delayed to the end of March byunseasonably heavy rains. The company was supposed to have completed 3.5 megawatts by now, according to the list. The penalties for delays in beginning operations are 10,000 rupees ($222) a day per megawatt for the first 60 days and 15,000 rupeesthereafter, according to the state power company


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Thermal Energy Newsletter Chhattisgarh UMPP ( Sarguja) :

RFQ has been issued on March 15th , 2010. Submission date was to be July 5th, 2010. The new Submission date is now June 6 ,2011 . Hasdeo coal block in Chhattisgarh is declared as no go area and is under MoEF review.

Tamil Nadu UMPP ( Cheyyur) :

RFQ document is likely to be out after Sept 2011 . CEA is pursuing MoEF to consider EIA forboth Power plant and port to enable fulfillment of pre-qualification for RFQ issuance. PFC plans to complete 3-season EIA report for captive port by April 2011

Orissa UMPP:

RFQ Released on June 14 , 2010. Submission date is now revised to 31st of May , 2011.

MoEF gives conditional nod to coal mining for Bedabahal project : The environment ministry has asked the power ministry to reduce coal mining area of a block attached to the 4,000 mw ultra mega powerproject at Bedabahal in Orissa by 10-15 %. Power ministry officials said the move would not affect the power project We have given conditional clearance to the coal block attached to Orissa ultra mega power project. If the power ministry agrees toprotect at least 200 of 260 hectares forest land, we can give them forest clearance. Also, mining approval to the block would be grantedonly if the power ministry is willing to forego two more power projects proposed to be lighted up with mines in the vicinity, environmentminister Jairam Ramesh said. The two other projects are proposed to be set up by NTPC and Orissa Power Generation Corporation . Dulanga and Manoharpur coal blocksare allocated these projects. Bedabahal project was allocated three coal blocks in IB valley coalfield in Orissa with a total of 886 million tonnes of reserves in 2006.

The environment ministry had denied mining permission to Meenakshi coal block while the other two have been cleared. Power minister Sushilkumar Shinde had said that MoEF at a meeting with PMO had agreed to grant clearance to the Meenakshi block.However, there is no official communication in this regard .

CEA plans to finalize sites for additional UMPPs in Gujarat, Jharkhand by March-April 2011 While sites at Kutch, Junagarh and Dwarka and are being considered for the second UMPP in Gujarat, the second UMPP in Jharkhand islikely to be set up at either Deoghar or Tenughat.

UMPP News


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Competitor Analysis KSK

Capacity Build up by year

Project Portfolio Details : PPA

Project Location Capacity Fuel

Arasmeta Chhattisgarh 43 Coal

Sai Regency Tamil Nadu 56 Gas

Sitapuram Andhra Pradesh 43 Coal

Arasmeta - Long-term PPA: Lafarge, short-term PPA: CSEBSai Regency - Long-term PPA: multiple captive industrial consumersSitapuram - Long-term PPA: Zuari and Sri Vishnu Cements Ltd.

Status Capacity Location Fuel

Operational / Under construction

VS Lignite 135 Rajasthan Lignite

Wardha Warora 540 Maharashtra Coal

Wardha, Chhattisgarh 3600 Chhattisgarh Coal

Arasmeta Expansion 43 Chhattisgarh Coal

Total 4318

Under Development

KSK Dibbin 130 Arunachal Hydro

KSK Narmada 1800 Chhattisgarh Coal

JR Power 1800 Orissa Coal

Wardha Naini 1800 Orissa Coal

Kameng Dam 600 Arunachal Hydro

Kameng Basin projects 345 Arunachal Hydro

Total 6475

Project PPA

VS Lignite Long-term PPA: multiple captive industrial consumers;13.5 MW merchant

Warora Long-term PPA: Viraj Profile and other group captive;135 MW merchant

KSKChhattisgarh

Phase 1 : GIDC: 450 MW; CSEB: 135 (full term); 540(20 yrs); merchant 675 MWPhase 2 : GUVNL: 1,010 MW, CSEB: 135 ( full-term)+540 (20 yrs); merchant 115 MW

Note : Some of the industrial users could not off take the power and hence

KSK is currently selling the operational capacity of Warora to MSEDCL


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Rajasthan State Profile

2009-10 (A) 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

Energy projections

Total Demand (MU) 44,031 45,654 49,510 53,672 58,164 63,013 68,248 73,901

Total Supply (MU) 42,983 44,929 47,505 49,707 53,834 63,096 73,512 79,642

Deficit Surplus (MU) 1,048 725 2,005 3,965 4,330 -84 -5,264 -5,741

Deficit / Surplus (%) 2.4% 1.6% 4.0% 7.4% 7.4% -0.1% -7.7% -7.8%

Peak Projections

Total Demand (MW) 6,859 7,509 8,306 9,184 10,152 11,218 12,394 13,689

Total Supply (MW) 6,859 7,415 7,780 8,111 8,744 10,032 11,425 12,248Deficit Surplus (MW) - 94 527 1,074 1,409 1,186 968 1,440

Deficit / Surplus (%) 0.0% 1.3% 6.3% 11.7% 13.9% 10.6% 7.8% 10.5%

Demand Supply Projections

Demand Side methodology: 2009 10 Figures taken as base year Historical sales, unmet sales, T&D loss figures, GDP growth factor used to arrive at demand side projections. Rural electrification has also been considered 75 % weightage has been given to historical based CAGR figures and 25 % has been given to GDP based projections.

GDP has been assumed to grow at 8.5 % T&D losses assumed to fall to 20% levels by 2016-17 For peak figures , load factor is taken based on historicals with worsening ratio of 2%

Supply Side Methodology: 2009 -10 Taken as the base year ( including any short term purchases )Capacity coming up and outside the state with PPA already signed have been considered .Case 1 bids for which the bids have been concluded have been considered.


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For further enquiries on any of the news stories or Statistics please contact the followingindividuals from the Thermal Energy Business Development Team :

Adarsh Srinivas :[email protected] : +91 96862 00110Ext : 3005

or

Vidhi Tyagi :[email protected] : +91 97313 01935Ext : 2976
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]

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Thermal Energy Newsletter April 2011