ENERGY NEWS JUNE-2020

Petroleum Conservation Research Association Sanrakshan Bhawan 10, Bhikaji Cama Place

New Delhi 110066

INDEX

S. NO. SUBJECT PAGE

1

1.1

2

2.1

3

3.1

4

4.1

4.2

5

TRANSPORT

-E-Vehicles (EV)

ENVIRONMENT

- Air, Water & Sound pollution

ENERGY CONSERVATION

-Oil & Gas

RENEWABLE ENERGY

-Wind

-Solar

OTHERS

1-4

4-6

6-15 16-18

19-24

24-26

This Energy News contains excerpts of articles picked up from selected daily newspapers & magazines.

1

What the Coming Wave of Distributed Energy Resources Means for the US Grid

Cumulative distributed energy resource capacity in the United States will reach 397 gigawatts by 2025, according to a new Wood Mackenzie report.

The DER mix is evolving quickly away from nonresidential load management, which made up two-thirds of all U.S. DER capacity in 2015 but will make up less than half by 2025.

Solar, electric vehicle infrastructure and residential load management potential now lead all other resources, accounting for more than 90 percent of DER capacity installed between 2016-2025.

Cumulative U.S. DER investments will eclipse $80.6 billion between 2020 and 2026. EV infrastructure, battery storage and grid-interactive water heaters sales growth will drive spending to a new peak in 2025. 

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Hundreds of gigawatts of DER capacity in the balance- According to the North American Electric Reliability Corporation, which regularly assesses the balance between supply and demand to ensure reliability, the need for demand response in North America will remain flat at around 35 gigawatts through 2025. However, NERC’s assessment of demand response needs is based on a traditional approach to resource planning.

The total capacity potential from residential load management, distributed solar, distributed storage, EV charging and distributed fossils will exceed the reliability requirement assessment by 362 gigawatts by 2025. The presence of DERs on the grid at far greater volumes than the demand response needs for reliability forecast by NERC underscores the untapped potential for DERs to shape load and integrate renewables onto the grid.

A new phase of grid planning is on the horizon in the U.S., though progress has been slow.

In September 2019, the Federal Energy Regulatory Commission concluded that it is interested in further exploring the interconnection of distribution-connected DERs, including load management opportunities. FERC’s pending rulemaking on aggregated DERs will significantly impact how load management potential will be used to provide system flexibility, reliability and resiliency. In the meantime, these DERs will provide valuable services to customers by reducing load, demand

3

peaks and exposure to dynamic rates, in addition to improving comfort and customer control.

The DER market is not insulated from COVID-19 impacts The COVID-19 pandemic and coming recession will have a very significant impact across DER markets in the United States, with annual DER capacity additions falling by 48 percent in 2020.   

2020 will be the first year the market doesn’t grow year-over-year in more than a decade, according to WoodMac. The U.S. DER market will experience a recovery in 2021 but will not exceed its pre-outbreak high until 2024. 

Analysts have identified several factors that could accelerate or hinder DER growth in the U.S. over the next five years. The most critical factors include retail rates, consumer demand, and macroeconomic conditions related to COVID-19.  More widespread use of dynamic rate determinants in customer utility billing (including time-of-use, demand charges, critical peak and real-time rates) would create greater opportunities for the DER market.   

California is the main market to watch for residential dynamic rate adoption. Between 2018 and the end of 2020, more than 10 million residential customers will be transitioned to a time-of-use rate in California, assuming the state's Public Utilities Commission does not delay the rollout due to the economic effects of the coronavirus pandemic. 

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This alone will more than double the number of customers on dynamic rates in the U.S. to more than 18 million customers. If dynamic rate determinants become more common in the next five years, they will improve economics for storage, residential load management, private EV charging and fuel-based generation. 

As for consumer demand and macroeconomic conditions, the likely onset of recession in 2020 is poised to have an impact upon every DER type. Lower economic activity and higher unemployment will decrease both consumer disposable income and business investment in the early 2020s. 

***** Air pollution dropped by 79% during lockdown, on rise again

Pollution levels in Delhi-NCR -- which had come down by around 79% during the

initial phase of the lockdown, mainly owing to no industrial activity, reduced on-

road traffic and a pause on construction activities -- is on an upswing again as

the city gradually opens up, a study by Centre for Science and Environment (CSE)

has found. Of the six mega cities where PM 2.5 levels were studied during this

period, Delhi saw the steepest rise of four to eight times, as compared to two to

six times in other cities, the analysis shows. CSE studied the PM 2.5 levels of six

cities — Delhi, Mumbai, Kolkata, Chennai, Hyderabad and Bengaluru — during

both the initial and last phases of the nationwide lockdown to check the spread

of Covid-19. According to the findings, while the PM 2.5 levels in other cities

dropped by 45-88% in the initial lockdown phase and witnessed a pollution spike

of 2-6 times on opening up, Delhi saw both the steepest drop and sharpest spike.

“In Delhi-NCR, one of the major factors that led to the drop in pollution was a

97% reduction in overall traffic and 91% reduction in trucks and commercial

vehicles entering the capital during April, as compared to the pre-lockdown

months of December-January,” the study found.

It said, as compared to 84,399 heavy vehicles entering Delhi in January this year,

only 7,942 plied during April, when the lockdown was in full effect. PM 2.5

(ultrafine particles that can enter the lungs and blood stream) is the most

prominent pollutant in Delhi-NCR as well as in other major cities across the

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country. Between March 25 and May 18, when the nationwide lockdown was

implemented without any major relaxations, the pollution levels in the national

capital reduced drastically and remained in the “satisfactory” category for most

of the time. After May 18, however, as lockdown rules were eased, the pollution

graph started climbing again. From May 18 to June 5, the air quality index of

Delhi has remained in the ‘moderate’ category. On Friday, the AQI levels was

recorded as 111 in the moderate category, as per the Central Pollution Control

Board (CPCB).

The pollution levels were also kept in check because of the increased Western

Disturbances that crossed Delhi during and after the lockdown period. Though

not all Western Disturbances brought rain, the increased wind speeds helped

blow away pollutants. Sunita Narain, director general, CSE, said the analysis

clearly shows that the nation needed an intervention at such a massive scale —

where movement across the country was completely restricted, and all

industrial activities stopped functioning — to clean our air and lungs. “It tells us

clearly what the key sources of air pollution are — emissions from vehicles and

industry,” she said.

The study states that Delhi has an approximately 12.1 million registered vehicles,

of which 4.6 million are private vehicles. Of these, only a fraction plied during

the lockdown period. Also, visits to workplaces reduced by 60%, while retail and

recreation activities reduced by 84%. Besides, activities in residential areas

increased by 29%. Cycling and walking increased from 14% to 43%. “The

challenge lies in the fact that on opening up, we are likely to go back to the old

habits. Today we are re-opening without any plan to keep the air clean. We need

to set an agenda including prompt implementation of BS-VI for cleaner fuel,

augmentation of public transport, create infrastructure and promote

incentivised cycling and walking and introduction of cleaner battery-powered

para-transit modes,” said Anumita Roychowdhury, executive director, research

and advocacy and head of air pollution and clean transportation programme at

CSE.

*****

6

Fuel Demand Rises Sharply in 1st Half of June

Sequential fuel demand improved sharply in the first half of June, although sales

were still lower than a year ago, as factories, offices and shops started reopening

and more vehicles came on the road with the stage-gated easing of the lockdown.

Sales are far better than in the lockdown months of April and May. The sales of

petrol declined 18% annualized in the first fortnight of June, recovering from a

bigger contraction of 35.4% in May and 60.4% in April, industry executives said.

Demand for diesel fell 15% in the first half of June from a year earlier. The fall was

29.5% in May and 55.6% in April for diesel. The June data are of the state fuel

retailers that together control about 90% of the market while the data for the

months of April and May include sales by private players as well. With the

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resumption of domestic flights, jet fuel demand has also improved. The sales of jet

fuel declined 73% year on year in the first fortnight of June. The decline was 83.6%

in May and 91.3% in April. The government is easing curbs and permitting airlines to

add more flights, which would further improve demand in the second fortnight of

June. The demand for liquefied petroleum gas, the widely used cooking fuel in India,

rose 7% during June 1-15 from a year earlier. The sales rise for the fuel was 12.8%

in May and 12.2% in April. Oil industry executives expect demand for petrol and

diesel to further improve this month as more offices, factories and shops open. They

also, however, believe that fuel demand may not return to normal levels for several

months as economic activity remains muted. “The lockdown has been eased but the

rate at which infection is rising, the fear is not going to go away. Until necessary,

people are still not stepping out of their homes and several companies are

encouraging employees to work from home—all this would weigh on demand,” said

an industry executive. He also pointed out that educational institutions are unlikely

to open soon, and even if they do, parents may not be keen to send their children

to school, which would mean lower demand for transportation fuel.

*****

Oil refiners push for extra pricing for supplying BS-VI fuel

The country’s public and private sector oil refiners are lobbying the government

to compensate them for the investments made in producing and supplying BS-

VI fuel, a government mandate which will take effect from April 1. State-owned

Bharat Petroleum Corporation Ltd will introduce the product officially in the

market across India from March 1, the company’s director (refineries) R

8

Ramachandran told the media today. BPCL invested about ₹7,000 crore to

upgrade its refineries to make the better-quality product. To start with, BPCL

and other refiners, will not price the product differently until the government

backs their demand to charge extra for recovering their investments. In the case

of BPCL, the investment made to produce BS-VI compliant fuel would require a

cost recovery of ₹0.70 paise per litre, while for others, it could be as much as

₹1.30 per litre.

Price parity

“Today, there is no extra pricing difference for BS-VI fuel,” Ramachandran said.

“There are discussions going on whether there will be extra pricing for BS-VI. As

it stands today, there is no recognition in the market for a fuel which is different

and its adding to our operating costs. Our aspiration is that we should be

compensated for what we have invested. We are aspiring that the investment

be built into the price and we should be getting an extra price,” he said.

This aspiration, according to refiners, may not be done by the “market” despite

the de-regulation in fuel pricing and would require a support from the

government on levying a “special price”.

“Price in the market is changing based on import parity. The retail selling prices

are coming from the build-up; our price recovery — if you look at it from the

refinery perspective — is based on import parity price. The import parity price

has nothing to do with recovering the cost of investment. So, unless there is an

artificial mechanism which actually provides that irrespective of the change in

the (market) price, then only I’m going to recover the investment,”

Ramachandran said.

Govt. support

The government has to take a view on average pricing of BS-VI fuel. BPCL

reckons that it should be assured of an extra income of ₹0.70 paise per litre for

BS-VI fuel for eight years to recover its investment.

“This is a policy matter on which it is difficult to make any predictions whether

somebody will make this happen or not. I have seen this in the European Union,

9

where the governments have been encouraging refineries and retailers to

upgrade their product quality by a compensation mechanism which could be

tax rebates, cess or viability gap funding,” Ramachandran said.

“All of us including the private refiners are together on this, we would like to

see this happen,” he added.

***** No OPEC decision yet on oil cuts – Saudi energy minister

OPEC hasn’t made a decision yet on whether to extend or modify its agreement

to cut oil output, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman

said. The Organization of Petroleum Exporting Countries and its allies are to

meet next week in Vienna to assess their global cuts and output policy. Prince

Abdulaziz is confident of OPEC’s partnership with other producers including

Russia, he told reporters in Riyadh.

“We are communicating with each other at every opportunity,” he said, before

addressing an industry conference in the Saudi capital. “The OPEC secretary-

general is attending this conference, and we just had a chat. We did not run out

of ideas.”

Crude rose, with benchmark Brent gaining as much as 68 cents a barrel, or 1.2

per cent. The contract was at $56.84 a barrel at 7.34am in London.

10

‘Positively Engaged’

Global oil demand will drop this quarter for the first time in over a decade as

the outbreak of the coronavirus batters China’s economy, creating a significant

supply surplus, according to the International Energy Agency. Russia hasn’t said

whether it will support a proposal by the coalition known as OPEC+ for deeper

production cuts of 600,000 barrels a day. Russia’s Energy Minister Alexander

Novak is “positively engaged” with Saudi Arabia and other suppliers, Prince

Abdulaziz said. OPEC Secretary-General Mohammad Barkindo, speaking at the

conference, said the world’s thirst for energy will continue to grow, in spite of

the coronavirus.

***** India monitoring oil market developments, says Pradhan

India has been in touch with the US, Russia, Saudi

Arabia and the UAE as part of efforts to monitor oil

market developments and responses, said Minister for

Petroleum and Natural Gas Dharmendra Pradhan.

Pradhan said this at a bilateral meeting with

Mohammad Sanusi Barkindo, OPEC Secretary General,

via video-conference. The duo discussed the

importance of the OPEC-India partnership and ways to

strengthen dialogue in the face of the current challenges. Anofficial statement

saidthe two discussed the impact of the pandemic on the global economy and

oil market, with a specific focus on India and Asia.

“With the easing of containment measures, a gradual recovery is expected to

revive oil demand,” said Pradhan. Referring to the recent G20 Energy Ministers’

meet and their support for market stabilisation efforts, he said: “The subsequent

understanding between OPEC and OPEC+ and also producers such as Norway

and Canada was a new departure.”

Barkindo invited Pradhan to take part in the 8th OPEC International Seminar,

which will be held in Vienna on June 16 and June 17, 2021.

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Both agreed to reconvene their next high-level energy meeting next month. An

OPEC Secretariat tweet said Pradhan congratulated OPEC for production cuts

that helped pull up global oil rates.

***** Deal Likely for More US Oil, Gas to Trim Trade Gap

Though the much-anticipated trade deal with the US is unlikely to be concluded

during the February 24-25 visit of President Donald Trump, India is expected to

agree to buy additional oil and gas from the US to narrow the trade deficit. US

trade deficit with India declined to $17 billion in 2018-19 from $22 billion in

2016-17 as India started importing oil and gas from America in 2017. In 2018-

19, India’s crude oil imports from the US stood at $3.6 billion and LNG import

at $527.14 million. In April-December 2019, India imported crude oil and LNG

worth $3.7 billion and $576.28 million, respectively, from the US, making it the

sixth largest supplier of crude oil and the fifth largest supplier of LNG to India.

Last September, Prime Minister Narendra Modi met the brass of US oil

companies in Houston for supply of crude oil and gas at discounted prices. Oil

purchases from the US, which started in 2017-18, have already crossed about 6

million tonnes a year. Purchasing hydrocarbon from the US may not be the

cheapest option but will help trim the trade imbalance between the two, which

has been in India’s favour, according to persons familiar with the issue. A deal

between Tellurian Inc and Petronet LNG will focus on price of gas import. The

US-India Strategic Energy Partnership will get a boost with Trump’s visit. India’s

trade surplus with the US is minuscule compared to China’s, but Washington is

keen to reduce gap. US oil companies have been producing record amounts of

crude oil in the last five years. According to a report by the BP Statistical Review

of World Energy 2019, the global production of crude oil in 2018 grew by a

whopping 2.2 mbd (million barrels per day), which is more than double its

historical average. “The vast majority of this growth was driven by US

production, which grew by 2.2 mbd — the largest annual increase by a single

country,” the report said.

*****

12

Plans Redrawn to End City Gas Distributors’ Monopoly

The downstream regulator is planning to end marketing monopoly of

Indraprastha Gas, Mahanagar Gas, Gail Gas, Gujarat Gas and more city gas

distributors in at least 30 license areas by declaring their network as ‘common

carrier', which would force them to reserve a part of their capacity for third

party, people familiar with the matter said. In the next few months, the

Petroleum and Natural Gas Regulatory Board (PNGRB) will likely be ready with

a regulatory framework for elimination of monopolies, they said. “If you look

around, every monopoly or oligopoly has certain checks – in the power sector,

there is regulatory oversight on tariff while in the telecom sector, limited

competition keeps tariff in check – but in city gas, the monopoly is unfettered,”

a person familiar with the thinking at PNGRB said.

Several CNG and piped cooking gas distributors have enjoyed exclusive

marketing rights far longer than the usual 3-5 years that licenses permit.

Introducing competition was necessary for market efficiency and increased

consumer benefit, the person said. PNGRB is unlikely to terminate all eligible

monopolies in one go. “The regulator will pick one or two cases in the beginning

as test cases,” the person said. “Obviously, there will be challenges by the

affected companies and that will have to be overcome, which will also make

the process more robust.”

The regulator’s attempts at ending monopoly in previous years failed as

distributors relied on the absence of a regulatory framework to stonewall such

a move. Which is why PNGRB is now arming itself with a regulatory framework

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for this. The board will have to publish its intent to end marketing exclusivity

and then hear the distributor as well as other stakeholders in a fixed timeframe

before taking a final decision on this, as per a draft regulation for declaring city

or local natural gas distribution networks as common carrier or contract carrier

it had floated in August last year. Once a network is declared a common carrier,

the distributor will have to reserve a fifth of its capacity for third parties,

including suppliers and customers, as per the draft. Existing CNG stations will

continue to be exclusively operated by the licensee. But third-party entities can

install new CNG stations, which will be permitted firm access by licensees. CNG

stations shall receive natural gas only through the city gas network of the

authorised entity. The license holder shall declare on its website its own

requirement and the capacity allocated on a firm contract basis which may be

verified by the PNGRB every month or at any other intervals the board desires,

as per the draft.

*****

Oil holds near $50 as OPEC+ dithers on production cutback

Oil held near $50/bbl in New York on signs that OPEC and its allies probably

won’t go ahead with a much-touted emergency meeting, even as a global

oversupply piles up. While the coalition’s technical experts have recommended

a production cutback as Asia’s coronavirus batters demand, Azerbaijan’s Energy

Minister Parviz Shahbazov told the RIA Novosti newswire that the group is

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unlikely to hold an early meeting. Saudi Arabia is pushing for action, yet key

partner Russia has so far resisted. As the alliance dithers, conditions in global

crude markets are deteriorating. A discount on prompt crude, which appeared

in Brent front-month contracts last week for the first time in a year, is taking

hold in the futures market. The pattern, which is known as contango and usually

indicates oversupply, now extends all the way through to September contracts.

Oil short-selling has more than doubled in just two weeks. Hedge funds boosted

bearish wagers against WTI crude by 41% in the week ended Feb. 4, following

a 52% surge a week earlier. Another indicator closely watched by traders — the

so-called “red spread” between December contracts in consecutive years — is

also shifting towards contango after collapsing from $1.31 a barrel in late

January to just 4 cents on Monday. The Organization of Petroleum Exporting

Countries and its allies have shown some readiness to intervene, with a

committee of technical experts counseling last week that the coalition — which

pumps about half the world’s oil — should deepen existing production curbs by

an additional 600,000 barrels a day during the second quarter. Yet Russia, the

biggest crude producer within the group, hasn’t yet announced whether it will

back the policy, or a meeting before the group’s scheduled early March

gathering to make it happen.

“The oil price will have to do the job of balancing the market because OPEC+

will not step in and counter the current demand shock from China,” said Bjarne

Schieldrop, Oslo-based chief commodities analyst at SEB AB. West Texas

Intermediate crude for March declined 0.6% to $50.05 a barrel on the New York

Mercantile Exchange as of 10:46 a.m. in London. It closed 1.2% lower on Friday.

Brent for April delivery fell 057% to $54.18 a barrel on the London-based ICE

Futures Europe exchange after losing 0.8% Friday. The global crude benchmark

traded at a $3.91 premium to WTI for the same month.

*****

15

Rosneft Keen on Bidding for BPCL

Russia’s largest oil producer Rosneft is keen to bid for acquisition of Bharat

Petroleum Corp (BPCL), sources said after the Russian firm’s CEO Igor Sechin

met oil minister Dharmendra Pradhan on Wednesday. Rosneft, which is the

majority owner of India’s second-biggest private oil refinery, is keen to expand

in the world’s thirdlargest and the fastestgrowing energy market. Sechin first

met Pradhan over breakfast, and then in delegation-level talks expressed

interest in bidding for the acquisition of government stake in Bharat Petroleum

Corp (BPCL), officials privy to the discussions said. The government is selling all

of its 53% stake in BPCL in the country’s biggest privatisation plan. Officials said

national oil companies from the Middle East, such as Aramco of Saudi Arabia

and ADNOC of UAE, have also been primed for bidding for BPCL. Sechin, who

was here to witness the signing of the first deal with Indian state-owned

refinery for supplying crude oil a fixed-term basis, expressed interest in

investing more in India, they said. On November 20, 2019, the Cabinet headed

by Prime Minister Narendra Modi had decided to privatise BPCL by selling the

government's entire 52.98% stake to a strategic investor along with

management control. Rosneft owns a 49.13% Nayara Energy Limited (formerly

Essar Oil Limited). Nayara owns and operates 20 million tonnes per year

refinery at Vadinar in Gujarat and also owns 5,628 petrol pumps in the country.

It is keen on expanding the fuel retailing network and BPCL would get it ready

access to close to one-fourth of 67,440 petrol pumps in the country.

*****

16

Gujarat adds highest wind power generation capacity

Continuing to attract wind power project developers, Gujarat added the highest

capacity for wind power generation in 2019-20. The state had also grabbed a

lion’s share of the new wind power capacity installed across India in the last

fiscal. The state saw installation of new wind power generation capacity of

1,468MW between April 2019 to March 2020, shows data compiled by Indian

Wind Turbine Manufacturers Association and Indian Wind Energy Association.

Gujarat was followed by Tamil Nadu and Maharashtra, which added 335 MW

and 206MW respectively. A total 2,118MW of new capacity was installed in

India in fiscal 2020, of which 70% was in Gujarat alone, the data further shows.

With new installations, Gujarat’s total wind power generation capacity has now

increased to 7,542MW, which is the second-highest installed capacity in India

after Tamil Nadu (9,304MW). “Most of the projects commissioned in Gujarat

during 2019-20 were auctioned by the central government. Although these

projects have come up in Gujarat, the power generated will go to the central

government pool,” said an industry player, who did not wish to be quoted.

India’s total installed wind power capacity stood at 37,744MW as on March 31,

2020. The state continued to see more installations even in the first quarter

ended June 30. The state attracted 132MW of the total 136MW installed in

India during the quarter. The remaining 4MW were added in Karnataka, said

industry sources. Gujarat had seen a sharp jump in wind power generation on

some days in May and July. Heavy pre-monsoon winds in last week of May had

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pushed up average wind power generation in the state to a high of 3,947 MW

on May 28.

*****

18

Energy firm AES Corp to speed up renewable energy

expansion in Brazil

U.S.-based energy company AES Corp will accelerate its expansion in Brazil's

renewable energy sector via its subsidiary AES Tiete Energia SA, after agreeing

to partially acquire Brazilian state development bank BNDES' stake in the unit

for 1.27 billion reais ($52.21 million). "The operation confirms our trust in the

Brazilian market and in Brazil's economy," Julian Nebreda, who heads AES Corp

in South America, told Reuters. "Tiete's model represents the future of the

electric sector and is what AES wants to do globally." Nebreda added that AES

Tiete will focus on possible wind energy acquisitions and seek out long-term

contracts to develop renewable energy plants that provide power directly to

clients. AES Tiete will also move to the Novo Mercado segment of Sao Paulo's

stock exchange, which has higher corporate governance standards, including

prohibiting companies from issuing preferred shares.

*****

19

The Solar 2.0 Race

Sunlight has become the fastest-growing and mature energy source with global

investments exceeding two trillion dollars in the past ten years. It now makes

the cheapest electricity beating coal, natural gas, and petroleum crude by wide

margins. But current solar technology has a few limitations that restrict its

potential to replace fossil fuels. For example, current solar technology cannot

generate the high temperatures required for melting steel or making cement.

This prevents solar’s industrial use. But there is good news. Multiple solar

research startups have reported breakthroughs in generating higher

temperatures and other areas. Research in three critical areas has the potential

to make solar the dominant energy source in less than a decade. First, industry

application. Existing technology is simple. Lenses and mirrors focus sun rays to

produce heat. Much like the way we burn paper using hand lens and sunlight.

We call this Concentrating Solar Power (CSP) technique. The problem is the best

CSP equipment could generate less than 1000°C of temperature – suitable for

heating or making electricity but at least 400°C short for any industrial use.

Cement or steel making happens in the temperature range of 1400-1600°C. This

compels most industries to use the energy derived from fossil fuels. Now a few

startups are reporting significant advances in this area. Bill Gates backs the

most promising one. It could achieve temperature much above 1600°C in field

trials. The firm used computer programmes to align large numbers of mirrors

to produce a laser-like sharp light beam, hot enough to melt steel. The startup

hopes to generate much higher temperatures than this. It plans to use the heat

to produce hydrogen from water at the industrial scale. This will allow the use

of solar energy not only for industrial processing but also for transport. Large

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vehicles like ships, planes, and trucks can use hydrogen as a fuel. Second,

improving energy storage. We need to store the solar energy for later use say

at night, on a cloudy day or for meeting peak demand, or in electric vehicles

(EVs). We can store electricity made from solar cells as heat or chemical energy.

The research focus is on increasing the efficiency of thermal conversion, which

is about 40% now. Battery storage cost is 20 times higher than the thermal

energy storage cost but holds the key to EVs. EVs are not clean enough if

electricity made from fossil fuels charges the batteries. Limited lithium-cobalt

reserves also restrict the widespread adoption of EVs. We may still be many

years away from cheaper and more efficient batteries. Three, improving Solar

Photo Voltaic (SPV) cell technology and manufacturing. We can see these on

rooftops or in large solar farms. SPVs convert sunlight into electricity through a

process called the photovoltaic effect. They are made of silicon wafers. They

also contain trace elements like cadmium, tellurium, gallium, indium, selenium

etc in small quantities. The problem is trace elements become hazardous at the

end of battery life. Research focuses on replacing these with compound

materials with a unique crystal structure. One such Perovskite Solar Cell (PSC)

has demonstrated good potential for commercial use. Big efforts are being

invested in changing the way solar panels are made. Focus is on printing them

in large rolls, much like newspapers. The radically reduced costs will then make

SPVs the primary source of heat and power generation and encourage

largescale global adoption. Today, the world is critically dependent on China for

SPVs and batteries. Two quick actions of the Chinese government, a $15 billion

annual subsidy and a massive domestic solar programme, have attracted

substantial investment in solar manufacturing capacities. These have made

China the undisputed king of SPVs. The low prices of Chinese equipment have

enabled many countries to make electricity at a low cost. But they have also

made local manufacturing mostly unviable. In Europe, many lead equipment

manufacturers have shut shop, unable to meet the Chinese scale and price.

India has started fabricating SPV cells but imports critical components like

wafers, metals, and poly-silicones. The past five-year import bill exceeds $16

billion. The choice is not simple. Cheap imports make cheap electricity but make

you dependent on China. Make imports expensive and pay more for power.

What is the way out? Most new research is happening outside of China. For

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India, participating in new research initiatives would be the right way. India is

implementing one of the most audacious solar programmes in the world. At Rs

2.44 per unit, it could generate the world’s lowest solar power tariff. It has also

moved into storage-based solar power that costs less than the thermal power.

It is really time for India to invest quickly into new research areas like the use

of solar power in industry and making of an efficient battery. A respected global

technology leader may head the initiative. Considering India’s advantages,

many talented global research teams would be open to collaborations. Any

breakthrough will give us a stake in the new exciting energy future and a

possible windfall dividend in a short time. And help in reducing import

dependence. Solar 1.0 driven by low-cost solar panels, demonstrated the

commercial viability of sunlight. Solar 2.0 will ride on new research, artificial

intelligence, and Industry 4.0 led manufacturing. It will target replacing all fossil

fuels. We cannot afford to lose on the Solar 2.0 race.

*****

TN can become clean energy leader

Year 2019 has been another important one for the renewable energy (RE)

sector in India. In Tamil Nadu, one of India’s earliest adopters of RE, the State

government and its agencies took four significant steps towards a more

ambitious RE future last year. February 2019 saw the release of a new solar

policy with an ambitious 9000 MW solar PV capacity to be installed in the State

by 2023. Second, the Tamil Nadu Electricity Regulatory Commission (TNERC)

began discussions on the procedure to be adopted for re-powering of old wind

turbines and organised public hearings in December 2019. Third, the Ministry

of New and Renewable Energy (MNRE) issued guidelines for the Pradhan Mantri

Kisan Urja Suraksha evem Utthan Mahabhiyan (PM KUSUM) scheme aimed at

solarising agriculture. As a State with significant water and energy consumption

in the agricultural sector, TN is expected to benefit significantly from the

programme. In 2020, the State is expected to launch the KUSUM scheme for an

initial 20,000 installations. Fourth, in November 2019, the TNERC issued a draft

amendment to the extant regulations on the Renewable Energy Purchase

Obligations (RPO) of 2010. This draft seeks to align TN’s RPO growth with the

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long-term RPO trajectory (21 per cent from RE sources) until FY 2021-22

proposed by the Ministry of Power (MoP) in June 2018 (see Table).

Cumulatively, these four steps signal a renewed focus on RE in TN’s energy

future. This would require the following actions be carried out in 2020.

Operationalise the solar policy

The launch of a policy is a first step. As studies have shown, there is significant

consumer interest to install solar panels on rooftops, but there remain both

real and perceived barriers to overcome. With the right regulations and

incentives, these can be resolved, particularly on the consumer side. For

example, commercial and industrial consumers who were excluded from the

“net feed-in” option in the solar policy, need to be included, as is the norm in

most States.

Net feed-in mechanism is where the energy imported from the grid is debited

at one tariff, while the energy to the grid is credited based on a (lower) solar

tariff determined by the TNERC; and settlement is based on net credit/debit.

Revising the net feed-in tariff to reflect the Average Power Purchase Cost

(APPC) will remove the disadvantage TN consumers face, owing to sale of

excess power to the grid. Overcoming the limited understanding among

residential consumers, of how to obtain solar panels and whom to contact

should be taken up as a priority. A strong and dedicated consumer helpline can

help overcome information barriers.

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KUSUM implementation

Agriculture is one of the most critical sectors in TN. And yet, much of the State’s

agricultural sector receives limited electricity supply, often during non-peak

hours. The Centre’s KUSUM scheme seeks to provide solar power directly to

the farms, with the added incentive that farmers can sell additional power

generated to TANGEDCO for a fee. Different States are experimenting with

different models within KUSUM. As TN rolls out KUSUM, the lessons from other

States could be useful. Developing and implementing pilot schemes across the

State will help TN hone on its own KUSUM design — one that also address the

energy-water-nutrition-agriculture linkages. Like many States, TN has not met

its RPO. The Chart illustrates the phenomenon: RPOs for 2012-13, 2013-14, and

2014-15 were mandated to be the same as 2011-12. Final tariff orders for 2016-

17, 2017-18 and 2018-19 are not yet out; hence RPO calculations are based on

Aggregate Revenue Requirement (ARR) projections made in TANGEDCO’s

August 11, 2017, tariff order. India’s 2022 target of 175GW of RE will be

achieved only if leading RE States like TN meet their targets. As per MNRE

reports, TN is to set up 8.884 GW of solar, 11.9 GW of wind, 0.075 GW of small

hydro and 0.649 GW of biomass by 2022. As on October 31, 2019, the State had

already achieved 0.12 GW of small hydro and about 1 GW of biomass, which

are in excess of the target. Wind energy is currently at 9.23 GW, and recent

discussions on re-powering existing wind plants are likely to result in exceeding

the 11.9 GW target by 2022. The challenge is with solar, where the current

capacity is 3.1GW. The State will need to add 6 GW in the next three years to

meet the RPO. While the solar policy will provide a much-needed fillip, TNERC

must ensure that the RE contribution is not limited to new generation capacity

installed, but that this RE is contributing to the share of electricity mix as is

required to meet the RPO regulations. Enforcing the RPO obligations to account

for a higher share of RE in the electricity mix will require significant focus on

integrated electricity planning, RE evacuation infrastructure and improving

system operations in addition to tendering and capacity addition. TN’s

estimated RE potential goes significantly beyond the current RPO trajectory.

Assessments conducted by expert agencies like the National Institute of Wind

Energy (NIWE) indicate a wind potential of 33.8 GW (at 100 m mast height) and

68.75 GW (at 120 m mast height). Similarly, TN’s solar energy potential is

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estimated to be 17.67 GW. Studies show that TN could be among the States to

shift significantly to a RE-based supply, if energy storage is added. The State

could initiate pilot projects to explore the multiple energy storage options that

exist. Tapping into the enormous RE potential that the State is endowed with

can help ensure that the State’s energy supply is clean and affordable. TN can

set an example for the rest of India.

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In green industrial zones lies India’s future

India has the potential, but has not been able to scale up the share of

manufacturing to its target of 25 per cent. It is blessed with natural resources,

human resource and a history of manufacturing everything, from pins to planes.

Growth in manufacturing can be achieved through a number of measures, for

instance, ease of doing business, improved logistics and transportation, reduced

on-going interference and harassment, and availability of land. Most of these

are well documented and the government is achieving steady progress, but that

is taking time. However, policymakers are forever worried about the ones that

get away with easing of rules than the many that would prosper, and this

mindset needs to change. But that is a subject for another discussion. One of the

key inputs required for investors to set up manufacturing facilities in India,

whether local or international, is land and infrastructure. Challenges of obtaining

land and building infrastructure, and the delays this creates, are well known. A

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solution is to create industrial parks/special economic zones through private

public partnerships, as the investment required to set up infrastructure is capital

intensive. There are a number of global and local developers who are now

capable of investing capital to create such infrastructure, if the government can

ensure land availability. We are also today faced with significant issues of

inequality in society, gender disparities and the need to address climate change.

Many times, manufacturing investment could lead to adverse results due to

dispossession of land and sources of income for the land-owners, pollution,

reduction of water availability, etc.

SDG goals- India can be a pioneer and create ‘SDG industrial zones’, whi,ch

address the land, and social issues . SDG refers to the Sustainable Development

Goals that were adopted by the United Nations in 2015. SDG zones are an

entirely new type of industrial parks/zones to address SDG goals. These zones

target SDG-compliant activities, aim to have an impact on all the SDG goals with

high ESG (environmental, social and governance) standards, compliance and

promote inclusive growth. According to the UNCTAD, SDG model zones could

act as catalysts to transform the ‘race to the bottom’ for the attraction of

investment (through lower taxes, fewer rules and lower standards) into a ‘race

to the top’ — making sustainable development impact a locational advantage.

While the core of the SDG zone will focus on creating infrastructure for

manufacturing, like other industrial estates/SEZs, they have to be designed

keeping in mind parameters such as zero carbon discharge, zero discharge into

groundwater and rivers, minimum or zero waste, use of closed circle loops,

gender neutrality, contribution to public revenues, minimising income gaps

within the zone, being responsible citizens and having high standards of

transparency.

All construction within the zone should meet green standards and ensure low

energy consumption. The zone should provide services to support and certify

the ESG and other parameters for units operating within it. It could create excess

capacity in areas like energy generation, waste management, and water

treatment and provide services to the community around it and achieve scale

efficiencies. The zone should provide all education and healthcare services

required for the residents, including child-care infrastructure.

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Investment potential- All this needs to be done not by regulation by the

government but by self-compliance and certification, which will then attract

investments. This can be achieved by involving all stakeholders. The zones

should also be transparent and high on disclosure on all aspects of ESG, including

climate impact. The number of investors who are now focussed on SDG is

increasing, and this class of investment is growing fastest among all categories.

The total assets under management of investors who are signatories to the

UNPRI (Principles of Responsible Investing) exceeds $90 trillion. It should not be

presumed that this activity will not be commercially viable — SDG model zones

can be economically rewarding too. While this was proposed by the UNCTAD

some time back, there are not many such zones in the world. India can be a

pioneer and a leader in this by developing all its new industrial estates and SEZs

using this model. In addition, it can encourage existing SEZs/estates to adhere to

these principles, which would enable them to prosper, create wealth and benefit

society and provide a new model for the world to follow whilst increasing

manufacturing output.

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