by admin | May 25, 2021 | Corporate, Corporate Buzz, Economy, Finance, News
New Delhi : With $100 billion of existing and proposed thermal power plants in financial distress and low cost but variable renewable energy capacity best able to meet targets, India has an opportune moment to transform its electricity sector by introducing day-ahead market pricing, the Institute for Energy Economics and Financial Analysis (IEEFA) said on Tuesday.
A new IEEFA briefing note, “Flexing India’s energy system: Making the case for the right price signals through day-ahead market pricing”, finds the current pricing system in India is a largely flat tariff providing little incentive for network or consumer efficiency through load smoothing.
Tim Buckley, co-author of the briefing note and IEEFA’s Director of Energy Finance Studies in Australasia, told IANS that the pricing system also does not incentivise the ramping up of flexible, peaking power generation capacity to meet peaks in demand.
“India’s electricity generation and demand profiles have become ‘peakier’, meaning there is clearly more demand at certain times of the day such as evening or during hot weather periods,” Buckley said in a statement.
“As India’s economy grows, this peakier demand will become even more apparent, putting stress on consumers, businesses and electricity generation systems currently struggling to meet those peaks.”
The co-authors of the note found India’s increasingly obsolete sub-critical coal-fired power fleet is not flexible enough to viably meet growing demand peaks with a shift in generation pricing.
“Coal-fired power stations cannot be ramped up and down quick enough to respond to peaks,” co-author Vibhuti Garg, IEEFA energy economist, said.
“Pricing tariffs are also not available to incentivise network efficiency and flexible peaking power generation.”
The total renewable energy installations in India reached 75 gigawatts (GW) by September 2018, representing 21 per cent of total installed capacity and generating a record high of 11.9 per cent of all electricity in the September 2018 quarter.
“India is going through a renewable energy transformation, but the pricing signals have yet to catch up,” said another co-author Anil Gupta, Director with Enerfra Services Pvt Ltd.
“India needs electricity production tariffs that encourage flexible electricity generation to meet the peaks in demand. This would help ensure grid stability as the share of renewable energy continues to increase.”
As India’s reliance on renewable energy increases, IEEFA notes there will be increased need for firming capacity to back up renewables at times of high demand.
Technologies that can provide this include pumped hydro storage, gas peaking plants, faster ramping, more flexible but lower utilisation coal fired power plant and battery storage.
Enhanced national and international grid interconnectivity will also play a role.
India is already planning a doubling of pumped hydro storage capacity and considering near term measures to promote gas peaking power generation, leveraging India’s existing base of 25GW of largely stranded gas-fired power generation.
Battery technology will get ever-cheaper as global production capacity continues to increase.
“Right now, however, a stronger price signal to incentivise fast ramping peaking power generators will help drive the roll-out of flexible power technologies that can meet India’s future peak demand,” Buckley said.
“India must introduce day-ahead market pricing tariffs to help manage peak demand while providing a better deal for consumers.”
—IANS
by admin | May 25, 2021 | Business, Commodity Market, Economy, Investing, Markets, Medium Enterprise, News
New Delhi : China’s investment in foreign wind-powered electricity markets has surpassed $12 billion in Europe and Australia alone as private and state-owned Chinese companies move aggressively to capitalise on fast-growing renewable energy markets, the Institute for Energy Economics and Financial Analysis (IEEFA) said on Thursday.
Most of the wind investment activity has been in Europe.
“China is now a driver of the European energy transformation and its international leadership in low emissions sectors of the future are entirely aligned with efforts to increase China’s global economic influence,” Sydney-based IEEFA analyst Simon Nicholas said.
“While Chinese foreign renewable energy investments were boosted by the launch five years ago of its Belt and Road Initiative (BRI), its foreign renewable energy investment now extends well beyond that framework.
“This is a superpower taking its energy policy global,” Nicholas said.
IEEFA’s research brief says China’s foreign renewable energy investments have increased as a result of the country’s pan-Asian Belt and Road Initiative (BRI), but the majority of these investments are not in BRI countries.
Interestingly, in BRI countries and in non-BRI developing countries, China continues to build coal-fired power projects as opportunities for domestic coal projects dry up.
The brief builds on an IEEFA paper published in January that described how China has become a leading global renewable energy investor “defying an overall slowdown in Chinese overseas investment as the country further positioned itself to dominate in new energy technologies such as batteries and electric vehicles”.
That report put China’s 2017 investment in new energy technology and resources at $44 billion, up from $32 billion in 2016.
In 2017, the Chinese government began restructuring its power-generation sector in an effort to reduce reliance on coal and exported China’s renewable energy technology while continuing to promote its coal technology in foreign developing markets.
Chinese foreign energy investment from 2003 to 2017 was dominated by hydro and coal-fired power, with wind and solar coming to the fore more recently by way of technology gains, efficiency improvements and dramatic declines in cost.
The briefing notes, however, that while Chinese wind and solar investment goes well beyond the BRI to developed nations, coal-fired power activity remains high within the BRI and in other developing countries.
“From 2003 to 2017, the majority of China’s foreign power investments in Southeast Asia went to hydro ($45 billion) and coal ($12 billion) projects, amounts significantly higher than Chinese wind investment in the European Union ($6.8 billion) and Australia ($5 billion).
“Although this trend is influenced by the fact that wind and solar investment has ramped up only within the last few years, it is clear that Chinese coal power investment is restricted more to the BRI and to developing countries.
The brief includes notes on Chinese companies that include China General Nuclear, China Resources Power, China Shenhua Group, China Three Gorges, State Development and Investment Corp, China Huadian Corp, and China Huaneng Group.
The US-based IEEFA conducts global research and analyses on financial and economic issues related to energy and the environment.
—IANS
by admin | May 25, 2021 | Opinions
By Tim Buckley,
As world energy markets transform at an unprecedented rate, India is at the forefront of the shift towards profitable renewables given that the countrys solar belt has the potential of 749 GW for power generation. As shown by a new IEEFA (Institute for Energy Economics and Financial Analysis) analysis, accelerating this trend will allow India avoid the costly mistakes made by slow-moving, late-learning European utilities, which have wasted billions on stranded coal and other thermal power assets.
In Europe, the rise of cheap renewable energy has pulled down wholesale electricity prices, causing financial pain for utilities that have delayed their transition from fossil fuels to renewables. Over the 2010-2016 period, European utilities have made $150 billion in asset write-downs. Investors from Goldman Sachs and UBS have been warning for years that coal has reached retirement age and that solar will become the “default technology of the future”.
Similar trends have been apparent now for some time in China and India, where drives to install both thermal and renewable capacity concurrently have seen coal-fired power station utilisation rates drop to record lows of 47 per cent and 57 per cent respectively in 2016. This is despite electricity demand growing in these countries.
To illustrate further, the giant, 63 percent state-owned power company, NTPC, provides 25 per cent of India’s electricity supply and as such plays a critical role in the country’s economic activity. Historically dependent on coal-fired electricity generation, India’s power sector is moving in a starkly new direction. The Indian energy ministry is driving this trend, pushing the nation toward energy efficiency and renewable energy targets that are highly ambitious but in IEEFA’s view, entirely achievable.
The government has set a target of 175 GW of renewable energy by 2022, including 100 GW of solar and 60 GW of wind. India’s draft Third National Electricity Plan (NEP3) for the next two five-year periods, to 2027, unambiguously concludes that beyond the half-built plants already under construction, India does not require any new coal-fired power stations. The 50 GW of coal power currently under construction nationally will operate at just 50-55 per cent capacity. Where these proposed new plants don’t replace old coal, they will essentially become stranded assets operating largely as reserve capacity. NTPC has 15 GW of coal-fired capacity in development but plans to retire 11 GW of older capacity.
Despite its history as a fundamentally coal-based power generation utility, NTPC is now rapidly rolling out in-house, utility-scale solar projects and it is signing power purchase agreements for solar power from private solar operators at record low, deflationary electricity tariffs absent subsidies. It is even beginning an entry into the electric vehicle sector by setting up charging stations. NTPC has committed to contributing 10 GW of solar capacity to the overall 100 GW government national target, making the company a cornerstone facilitator of India’s national electricity transformation.
Loss-making European utilities are now looking to India for new, safe investment opportunities given the impressive renewable energy drive. One of the biggest European power companies, the French utility Engie, which lost a total of some $40 billion during 2010-2016 on fossil fuels and nuclear holdings, intends to invest $1 billion in Indian solar over the next five years whilst also considering wind power. Engie is also reported to be one of the parties interested in the purchase of Singapore-based Equis Energy’s Indian renewable energy portfolio.
Engie investors, like Indian officials, see that the transition from polluting to low carbon technology is where smart money is heading. Thus, Engie is undergoing a transformation plan, which includes a target that low carbon activities aiming to represent more than 90 per cent of earnings by 2018.
Engie and Italian utility ENEL are also amongst the international investors heading into South African renewables. The country has been running a renewable energy procurement programme that is internationally regarded as well-designed and successful. So far 2.2 GW of renewable capacity has been completed, attracting over $14 billion of investment.
But South African utility Eskom continues to fail to appreciate the future role of renewable energy as it continues with expensive giant new coal plants, Medupi and Kusile, even though electricity demand is falling. Eskom now has more than 5 GW of excess coal capacity even before most units of its new plants are operational.
South Africa, like India, is in transition. A key difference between the two nations is that electricity demand growth has stalled in South Africa which means any renewables growth immediately eats away at coal’s generation profile as in Europe. In India, continued demand growth can help NTPC avoid the huge losses in its existing coal fleet if that demand growth is increasingly supplied by renewables going forward. If you look at the evidence, there is only one safe bet to make billions and avoid European-style losses.
(Tim Buckley, Director of Energy Finance Studies at IEEFA, has 25 years of financial markets’ experience, having spent the majority of this time as a top-rated equities research analyst in Australia, and he has covered global and Asian equity markets. The views expressed are personal. He can be contacted at tbuckley@ieefa.org)
—IANS
by admin | May 25, 2021 | Commodities, Commodities News, Commodity Market, Corporate, Corporate Reports, Finance, Investing, News
New Delhi : The Adani Group’s entire A$3.5 billion (Rs 178 billion) debt-funded ‘investment’ in Australia is gravely at risk, the US-based Institute for Energy Economics and Financial Analysis (IEEFA) said on Monday.
In a new report it details how Adani’s Abbot Point Coal Terminal has excessive financial leverage, negative shareholders equity and runs the risk of becoming a stranded asset if Adani’s Carmichael mine does not get a $1 billion Australian subsidy.
The Abbot Point Coal Terminal is due for a $1.5 billion debt refinancing next year and a cumulative debt refinancing of $2.11 billion by 2020.
Currently, operating at just over 50 per cent capacity, the Abbot Point Coal Terminal needs the Carmichael mine to fill the gap created as its current take-or-pay contracts progressively expire.
“Securing this refinancing is going to be a real challenge, not the least because the port value has been tied to the success of the Carmichael coal mine proposal which is itself yet to secure funding and which the ‘big four’ Australian banks have refused to touch,” an official statement quoting report co-author Tim Buckley said.
Buckley’s the IEEFA’s Director of Energy Finance Studies, Australasia.
“The potential for a loss of up to $1.5bn on any decision to walk away from Carmichael mine and rail proposal, explains why the Adani Group has been so focused on securing Australian tax payers money and royalty holidays to subsidise his loss making ventures,” he said.
“To the extent able to be analysed from Australian Securities and Investments Commission records, Adani’s entire mine, rail and port operation in Australia looks to be 100 per cent debt financed and shareholders funds now tally an unprecedented, negative $458 million combined. The value at stake for the Adani Group’s Carmichael mine proposal is far bigger than previously understood,” Buckley added.
Whilst Adani continues to search for overseas project funding, the report, “House of Cards: The Escalating Financial Risk of Adani’s Abbot Point Coal Terminal”, the report traces events that make the Carmichael project an even greater financial risk.
The events include Adani’s major proposed off-take coal customer, Adani Power Ltd’s 4.6 GW power plant at Mundra in Gujarat, is financially distressed and its equity is for sale for just Re 1 but has no buyers so far.
India’s thermal coal imports have continued the downward trend of the last two years and are down 13 per cent year-to-date in 2017 compared to the prior year.
And, in the light of new solar infrastructure projects delivering electricity at prices now 20 per cent below many Indian thermal power plant tariffs, financial analysts don’t see any imported coal demand to justify more expensive seaborne supplies.
—IANS
