Thermal Energy Newsletter

Thermal Energy Newsletter

April 2011 Issue

Thermal Energy Newsletter

Contents
1 2 Sector round up and key data IPP News

3
4

Fuel Related News Policy and Regulatory News

Equipment & Transmission updates Renewable Energy News UMPP News

5
6 7

Thermal Energy Newsletter

Sector Round-up & Key Data

PEAK Demand - Supply

Month Mar-10 Apr-10 May-10 June-10 July-10 Aug-10 Sep-10 Peak Demand (same mnth last yr) 118472 ( 109492) 121220 (110958) 116757 (107920) 116505(111662) 113388 (108930) 114737 (116281) 117314(115116)

All India (in MWs) Deficit % -13.3 ( -11.6) -15.1 (-12.3) -12.8(-11.8) -12.7( -13.6) -12.1(-12) -10.7(-14.6) -8.9(-11.7)

ENERGY Demand -Supply

Month Mar-10 Apr-10 May-10 June-10 July -10 Aug -10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Energy Demand (same mnth last yr) 76493 ( 69595) 75321 (67992) 74613 (68471) 71391(69508) 70076(67232) 70952(73273) 68032(68994) 74162(69714) 64417(62944) 71363(62766) 75836 (70306) 69501(64306)

All India (in MUs) Deficit % -11.7 ( -10.9) -14.6 ( -11.2) -11.4(-8.8) -9.4(-8.4) -8.3(-8.9) -7.5(-10.9) -5.9(-9.6) -5.9(-9.4) -6.5(-8.9) -8.2(-10.7) -7.6(-10.7) -7.8(-9.7)

11TH Plan Capacity addition update

Category
Capacity at end of 10th plan Capacity as of 28-02-2010 Added in the 11th plan till date

Capacity (mw)
1,32,329 1,71,926 39,597

Capacity Break up ( 28-02-2010)

Category Thermal Nuclear Hydro R.E.S Capacity (mw) 1,11,324 4,780 37,367 18,454

Oct-10
Nov-10 Dec-10 Jan -11 Feb -11

118533(115432)
114234(109611) 117409(112505) 122470 (112505) 120536 (113505)

-9.4(-12.1)
-8.7(-12.2) -10.5(-12.5) -11.1(-12.5) -10.2(-12.5)

Thermal Energy Newsletter

Sector Round-up & Key Data

Key states PEAK demand supply situation - Snapshot

Source : CEA

(in MWs)

(2009-10)

(feb 11)

Key states ENERGY demand supply situation - Snapshot

(2009-10) Energy Demand Demand met Deficit % Energy Demand

(in MUs)

(feb-11)
Demand met Deficit %

State U.P Chttgh Punj Guj M.P Delhi A.P T.N Katka Mah

Peak Demand 10856 2819 9786 10406 7490 4502 12168 11,125 7942 19388

Peak met 8563 2703 7407 9515 6415 4408 10880 9813 6897 14664

Deficit % -21.1 -4.1 -24.3 -8.6 -14.4 -2.1 -10.6 -11.8 -13.2 -24

Peak Demand

Peak met 8951 2535 4910 9028 8068 3306 11232 10436 7618 15479

Deficit % -18.6 -6.7 -9.2 -6.6 -7.6 -3.3 -0.2 -8.3 -6.4 -20.7

State

11003 2719 5406 9671 8728 3418 11250 11377 8137 19530

U.P Chttgh Punj Guj M.P Delhi

75930 11009 45731 70369 43179 24277

59508 10739 39408 67220 34973 24094

-21.6 -2.5 -13.8 -4.5 -19 -0.8

6042 841 2615 5804 4595 1549

5313 826 2472 5556 3552 1548

-12.1 -1.8 -5.4 -4.3 -22.8 -0.2

A.P
T.N Katka Mah

78996
76293 45550 124936

73765
71568 42041 101512

-6.6
-6.2 -7.7 -18.7

6665
6589 4676

6595
6122 4459

-1.1
-7.1 -4.6

10982

9258

-15.7

Deficit of 10% 15 % :

Deficit of 15% & above :

Deficit of 10% 15% :

Deficit of 15% & above :

Thermal Energy Newsletter

Sector Round-up & Key Data

Sector wise dispatch of coal :

Type 2009 Coal Dispatch (mt) 326 % annual dispatch 81 2010 Coal Dispatch (mt) 332

(mn tns)

Power Trading Data

8 7 6 5 4 3 2 1 0
6000
Rs./Kwh Mus

% annual dispatch 80

5000 4000 3000 2000 1000

Power

Steel Cement

20 7

5 2

22 6

5 2

(2009)

0 (2010)

Other . Industries S&M Industries Total

Volumes (MU's) Month

Day ahead Price (Rs/ Kwh) Average IEX Prices (Rs/ Kwh) 2.04 2.47 3.34 3.68

Bilateral rates (Wght. Avg ) IEX Traded volumes (mus) 833.5 1121 1205 1163

Below are the Monthly IEX prices and UI prices :

41

10

46

11

Nov-2010 Dec 2010

401

415

Jan - 2011 Feb - 2011

Thermal Energy Newsletter

IPP 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 bids for 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 mw of 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 UPPCL requires, its price is not the lowest and hence the bid evaluation committee has decided to compare the 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 to supply 680 mw at Rs 4.283 per unit, and two other Power Trading Corporation companies, KVK Nilachal Power and Ind-Bharath Power have offered 160 mw at Rs 4.413 a unit and 200 mw at Rs 4.810 a unit, respectively.

Financial Closure
NCC - Krishnapatnam project Hopes to achieve financial closure by May for the Rs 7,000-crore, 1,320-MW thermal power project it is setting up in partnership with Gayatri Projects at Krishnapatnam . May dilute stake to a private equity player , to meet the equity requirement for some projects. PFC and REC have agreed in principle to pump in Rs 3,200 crore, which is part of the Rs 5,200crore debt portion For the rest, NCC is negotiating with SBI and ICICI Bank. NCC picked up 55 per cent stake in Nelcast thermal project at Krishnapatnam for Rs 150 crore. The coal linkage for the project has been achieved with Coal India Ltd agreeing to re-allot the coal initially meant for 1320-MW thermal project at Sompeta.

Financial Closure
DB Power - Chhattisgarh DB is developing a 1,200-mw coal-fired mega power plant at an estimated cost of Rs 4600 crore. Debt portion amounts to 3500 crs It is raising 75% of the project cost as debt. The company hopes to sign the credit deal in the next two weeks, with SBI as the sole debt arranger and syndicator DB Power is close to raising Rs 2,625 crore to part-finance its mega power project in Chhattisgarh. The interest rate is likely to be 12 %. The firm is little tying up with eight financial institutions with LIC, Union Bank of India and L&T Infrastructure and Finance among them.

Other News
Ispat Industries may buy stake in JSW Energy's 300 MW Ratnagiri power project Ispat Industries is taking it's first steps towards backward integration to turnaround the company, as announced by JSW Steel at the time of the Ispat's acquisition in December, 2010. Sources said, Ispat is close to buying 26% stake in JSW Energy's 300 MW Ratnagiri power project for a little over Rs 100 crores. This will allow Ispat to use the electricity from the plant for captive consumption to produce steel at it's Khopoli plant. Sources say Ispat Industries may buy a 26% stake in an SPV (special purpose vehicle) which will own 300 MW of JSW Energy , the rest of the 74% will be held by JSW Energy. Ispat's cost of electricity is at Rs 6/unit and will be reduced to Rs 4.5-4.8/unit post synergies

Thermal Energy Newsletter

Fuel Related News
No-Go deadlock delays coal block auction Six months after Parliament approved the crucial amendment to the Mines and Minerals Act, 1957, for competitive bidding of coal blocks, an inter-ministerial committee is still struggling 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 know how many of them are falling in the No-Go areas or how many are to be freed and in how much 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 private sector 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 the assets. 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 Adani Enterprises 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$100 million after two years and A$ 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. At present, 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 would continue to supply coal to current buyers in China and Japan.

Thermal Energy Newsletter

Policy News
Likely changes in Indonesia Coal Policy Indonesia may be looking to ban the exports of low-grade thermal coal by 2014 , something that 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 procure enough supplies for domestic consumption. Low-quality coal, of between 4,800 and 5,800 kcal, constitutes a significant portion of exports out of Indonesia and, considering the country accounts for about 30 per cent of the global thermal coal supply, an export ban could reduce worldwide supplies by at least 10 per cent

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 Wardha dam meant for farmers. A petition has been filed by the Backlog Removal Committee, a citizen's body, challenging the water supply. The committee 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 Petitioner committee had argued last week that the Governor's directives are of constitutional nature and are, as such, binding on the state government. They said Vidarbha's irrigation backlog is 68.47 per cent and Amravati has a backlog of 70,000 hectares. They claimed that supply 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 one for 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 no power 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 that such directions have been issued by the Governor to the State Government and its functionaries, it will be a case where the Governor has been 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.

Thermal Energy Newsletter

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 facilities and has in fact started production at its plant located at Hazira, Sura. It plans to manufacture BTG with an annual capacity of 4000 MW each. Alstom -Bharat Forge: expected to start operations facility in Mundra SEZ by June 2013. The capacity 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 manufacturing capacity of 3000 MW. Gammon- Ansaldo: Probable date of completion of facilities at Tiruchy in Tamil Nadu is December 2012 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 for procurement of machinery for manufacturing facilities are in final stages. Completion of facilities is planned by end of 2011
Fuel Contractor Total Order Price &Price per MW (Rs) Scope of Work

Equipment Orders and Contracts

Power Plant/ Owner Capacity (mw)

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&T

Rs.1100 / 3crs / MW

The engineering, procurement and construction contract includes design, supply, installation and commissioning of the complete power plant on a turnkey basis

Thermal Energy Newsletter

Renewable 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 the National 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 of solar power generation capacity by 2022. Over 70% of plants being set up under the first round of the mission are based on imported equipment . There is an active consideration within the government that it should either ban or further restrict import of equipment for solar projects. The ministry of new and renewable energy said that at least sourcing cells and modules from 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 statesubsidized 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 megawatts of capacity by 2022. Lanco Infratech Ltd, the Hyderabad-based developer that completed its 5-megawatt allotment on Dec. 20, is the only company that met the deadline. Five projects awarded to Azure Power of New Delhi, Zeba Solar, Germany's Dreisatz GmbH and MI MySolar24 Ltd. weren't completed. Azure, which built a 2-megawatt plant in Punjab, said the first phases of two plants were delayed to the end of March by unseasonably 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 rupees thereafter, according to the state power company

Thermal Energy Newsletter

UMPP News
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 for both 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 power project 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 to protect at least 200 of 260 hectares forest land, we can give them forest clearance. Also, mining approval to the block would be granted only if the power ministry is willing to forego two more power projects proposed to be lighted up with mines in the vicinity, environment minister Jairam Ramesh said. The two other projects are proposed to be set up by NTPC and Orissa Power Generation Corporation . Dulanga and Manoharpur coal blocks are 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 is likely to be set up at either Deoghar or Tenughat.

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Competitor Analysis KSK

Project Portfolio Details :
Project Arasmeta Location Chhattisgarh Capacity 43 Fuel Coal

PPA
Project VS Lignite Warora KSK Chhattisgarh PPA Long-term PPA: multiple captive industrial consumers; 13.5 MW merchant Long-term PPA: Viraj Profile and other group captive; 135 MW merchant Phase 1 : GIDC: 450 MW; CSEB: 135 (full term); 540 (20 yrs); merchant 675 MW Phase 2 : GUVNL: 1,010 MW, CSEB: 135 ( full-term) +540 (20 yrs); merchant 115 MW

Sai Regency
Sitapuram

Tamil Nadu
Andhra Pradesh

56
43

Gas
Coal

Arasmeta Long-term PPA: Lafarge, short-term PPA: CSEB Sai Regency - Long-term PPA: multiple captive industrial consumers Sitapuram Long-term PPA: Zuari and Sri Vishnu Cements Ltd.
Status
Capacity Location

Fuel

Operational / Under construction

VS Lignite Wardha Warora Wardha, Chhattisgarh Arasmeta Expansion Total Under Development KSK Dibbin KSK Narmada JR Power Wardha Naini Kameng Dam Kameng Basin projects 130 1800 1800 1800 600 345 Arunachal Chhattisgarh Orissa Orissa Arunachal Arunachal Hydro Coal Coal Coal Hydro Hydro 135 540 3600 43 4318 Rajasthan Maharashtra Chhattisgarh Chhattisgarh Lignite Coal Coal Coal

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

Capacity Build up by year

Total

6475

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Rajasthan State Profile

Demand Supply Projections
2009-10 (A) Energy projections Total Demand (MU) Total Supply (MU) Deficit Surplus (MU) Deficit / Surplus (%) Peak Projections Total Demand (MW) Total Supply (MW) 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

44,031 42,983 1,048 2.4%

45,654 44,929 725 1.6%

49,510 47,505 2,005 4.0%

53,672 49,707 3,965 7.4%

58,164 53,834 4,330 7.4%

63,013 63,096 -84 -0.1%

68,248 73,512 -5,264 -7.7%

73,901 79,642 -5,741 -7.8%

6,859 6,859 0.0%

7,509 7,415 94 1.3%

8,306 7,780 527 6.3%

9,184 8,111 1,074 11.7%

10,152 8,744 1,409 13.9%

11,218 10,032 1,186 10.6%

12,394 11,425 968 7.8%

13,689 12,248 1,440 10.5%

Deficit Surplus (MW)

Deficit / Surplus (%)

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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Thermal Energy Newsletter

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

Adarsh Srinivas :
adarsh.srinivas@gmrgroup.in Mobile : +91 96862 00110 Ext : 3005 or

Vidhi Tyagi :
vidhi.tyagi@gmrgroup.in Mobile : +91 97313 01935 Ext : 2976

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