At a conference on ‘Powering Northeastern India’, organized by the Independent Power Producers’ Association of India (IPPAI) and supported by the Assam government power minister Pradyut Bordoloi projected the state as a safe and secure destination for investment in the power sector.

At the same time, Bordoloi reminded the power developers that by serious investors he meant the state is looking for responsible and not fly-by-night investors. Bordoloi exhorted investors to explore the possibility of coal-based methane (CBM) in the state, saying the state has a large deposit of CBM.

“We are seeking investments in the CBM sector. Upper Assam has a large deposit of CBM. There is a scope for serious investors to explore this energy source and assess its availability. The Centre has initiated work in this regard,” Bordoloi said, adding that power production is yet to take off in Arunachal Pradesh where many power developers have signed memorandums of understanding for power projects there.

The power minister also pointed out that private sector players should get involved in the power distribution sector too. The IPPAI organized the conference with a view to promote fresh investments in the state’s power sector and develop this sector.

Power developers at the conference also reiterated the necessity of tapping hydro-power potential in the northeast for energy security in the region. They said that tapping of hydro-power has become an imperative to counter the possibility of China’s plan to divert the Brahmaputra.
Agencies

“We are setting up our biggest solar power project at an estimated cost of around Rs 700 crore in Rajgarh district next year. NTPC will sell the entire power generated from this project to Madhya Pradesh,” NTPC official said today.

“The government will soon ink a power purchase agreement with NTPC to procure energy from this project,” the official said.

According to NTPC officials, it has kick-started the process of setting up 5 Mw and 15 Mw solar stations in Orissa, Himachal Pradesh and Andhra Pradesh, but the company’s biggest non-conventional energy project would be set up in Madhya Pradesh.

“In all, we are working on generating over 100-Mw solar power energy projects across the country right now,” they said.
Agencies

When asked whether the two entities are looking for other opportunities, Tata Power Executive Director (Finance) S Ramakrishnan said, “Yes, the joint venture is scouting for other opportunities both in India and Nepal… The Tamakoshi hydro power project in Nepal is at an early stage of development and is awaiting government approvals.”

According to him, the commissioning date would be decided after receiving necessary government approvals. Earlier this year, they had bagged the 240 MW Dugar hydroelectric project in Chenab Valley in Himachal Pradesh. Tata Power has an installed capacity of 3,648 MW, out of which 500 MW is from hydro projects.

It is also in a joint venture with the Bhutan government. The company is implementing a 114 MW from Dagachhu hydro project with Druk Green Power Company there. Ramakrishnan said the company has “aggressive plans of generating 25,000 MW by 2017 and intends to have a 20-25 per cent contribution in energy generated at all times from clean power sources, including a mix of hydro, solar, wind, geothermal and waste gas generation”.

However, he did not divulge specific investment figures for renewables. Of Tata Power’s total installed capacity, wind and solar account for 348 MW and 3 MW, respectively, at present.

Ramakrishnan said the company expects to add 30 MW of solar power every year. Tata Power is implementing a 25 MW solar project in Mithapur, Gujarat, which is expected to commence commercial operations this month.

The power utility has partnered with Australia-based Sunengy to build India’s first floating solar plant. “The floating solar plant is a technology development and will be a 13 KW pilot installation. The bench scale testing is in progress to achieve the desired results. It is proposed to have the plant installed by March 2012,” he said.

In the wind segment, Tata Power expects to add 100-150 MW over the next three years, he noted. Ramakrishnan further said Tata Power is also looking for collaboration in clean coal technologies.
Agencies

This has significant implications for India – a country with a growing hunger for energy and faced with  significant shortages in fossil fuels; blessed, however, with plenty of sunshine. While still higher than conventional power cost, which is at Rs 3.50-Rs 4.0/kwh, this development is significant because it shows that prices have declined at a much faster pace than was initially anticipated.

Against the regulated tariff of Rs 15.39/kwh, the median price discovered for 350 MW of projects is Rs 8.5/kwh and the lowest is Rs 7.49/kwh. Last year under a similar auction, the median price discovered was Rs 12/kwh and a lowest price Rs 10.9/kwh.

The steep fall in prices is a result of global demand-supply dynamics in solar panels, which have seen a slump in demand in Europe and new low-cost supplies coming from China. This combined with overseas export credit dollar financing at much lower rates as compared to rupee loans has led to this new price discovery in India.

In May 2011, KPMG released a report on solar sector, The Rising Sun, which projected solar power to achieve grid parity in the next five-six years. Given such aggressive bidding by market players and such sharp fall in prices, it is likely that this expectation will not only be met but will be exceeded.

Most of the players who have emerged successful in this bid have some experience in developing solar projects, thereby giving comfort that the bids are serious.

The lowest bid went to a French company, Solairedirect. Some of the prominent names among Indian companies that emerged successful with large project allocations are Mahindra, Welspun and Azure Power. What this auction process has shown is that solar power can play a much larger share in India’s energy mix in the next decade compared to what was previously thought possible.
Rediff.com

Suzlon needs to invest in property for wind farms and power distribution equipment to maintain its dominant share of the Indian wind market, which is expanding by 40 percent annually, according to Chairman Tulsi Tanti.

“We need some liquidity” to fund expansion, he said in an interview this week in Durban, South Africa, at international climate talks. There’s “nothing wrong” with founding investors, known in India as “promoters,” selling small stakes that will bring big benefits, he said.

Tanti’s remarks counter speculation by analysts and traders that the 1 billion rupees ($19.3 million) in proceeds may have been raised to meet margin calls on bank loans backed by shares. Samanvaya Holdings Pvt., a holding company of various promoters, sold 2 percent on Nov. 17 as Suzlon slid toward an all-time record close of 21.35 rupees and its second-worst month on record in the stock market.

“It’s not a good sign because it could mean they’re running out of cash,” said Raj Kothari, a London-based bond trader at Sun Global Investments Ltd., which owns Suzlon convertible debt. “Even if he’s going to put the money back in the company, that’s not reassuring,” Kothari said by phone.

Suzlon lost 40 percent in November for its second-worst month since it began trading in 2005, according to data compiled by Bloomberg. “With the share price falling, they may have to get money for the company to meet margin calls,” Kothari said.
Company Denial

The company denied that suggestion in an e-mailed response to questions from Bloomberg. Separately, it said promoters have been increasingly pledging shares against loans either to borrow more, to repay loans or for minor “top-ups” of collateral.

Declining stock prices in Asia’s worst-performing major market this year has forced Indian companies to pledge shares worth 1.1 trillion rupees as collateral to banks for loans as of Nov. 18, according to a report by Standard & Poor’s Indian unit Crisil Ltd.

“In the backdrop of inadequate disclosure levels on share pledging, investment in such companies exposes an investor to severe price volatility,” Crisil said.

Suzlon has $569 million of foreign-currency convertible bonds that mature next year, the company said in an e-mail response to questions on Nov. 30.

Tanti declined to say whether the company was approaching bondholders to buy back those notes before they mature. They’re apt to miss the threshold at which investors would convert them into equity. “We have a very clear plan,” Tanti said. “We are comfortable to repay bondholders in a time schedule.”

If the stock price continues to fall, Suzlon’s credit spread might increase, meaning its borrowing costs for new debt or for refinancing existing loans could also rise, Priyo Mayengbam, a Singapore-based analyst at Frontier Investment & Capital Advisors, said in a Nov. 18 response to questions.

A wider group of Suzlon’s founding shareholders had pledged a total of 76 percent of their holdings as of Oct. 21 in exchange for loans, according to data from the BSE Ltd. and National Stock Exchange of India Ltd. In total, 41 percent of the company’s outstanding shares have been posted as collateral.

When a large amount of shares are pledged, it reduces the founders’ ability to absorb volatility in the stock price, said Atul Gharde, a Hong Kong-based credit analyst at SJS Markets Ltd.

“Falling stock can lead to margin calls, which leads to more shares pledged or dumping of stocks by creditors to cover losses, a negative spiral,” he said.
Agencies

“We are well-funded right now, we raised around $1 billion in the last 12 months. We commissioned 100 MW in solar projects from April-September, 2011, and would add 300 MW more through solar in the next nine months,” Moser Baer India Executive Director Ratul Puri said.

These projects would be set up in Gujarat, Orissa, West Bengal and Rajasthan in India, as well as abroad in countries like Germany, Italy, the UK. “It would be half and half, that is, 150 MW projects in India and the same abroad,” Puri said.

The company also has ambitious plans for augmenting its solar power generation capacity to 1 GW, or 1,000 MW, by 2015. The company recently commissioned a 23.8-MW solar farm at Lauta, in Germany. The project has been constructed with long-term debt funding from DKB Bank, Germany, which has also financed its Thuringen and Meissens projects.

Moser Baer Clean Energy also commissioned a 30-MW solar farm, developed at an approximate investment of Rs 465 crore, in Banaskantha district of Gujarat in October this year.

The solar farm, spread over 305 acres of land, is likely to generate about 52 million Kwh of energy, which would provide electricity to nearly 50,000 homes everyday and save about 50,000 tonne in carbon emissions annually.
Agencies

It is one of the leading renewable energy projects in that country. South Africa’s Minister for Energy, Dipuo Peters has announced her department’s approval of the facility, which will utilise Suzlon’s 2.1 MW turbines.

“South Africa needs more energy and it also needs thousands of decent and sustainable ‘green’ jobs. The wind energy sector is well positioned to deliver both of these requirements and more,” Suzlon Group Chairman and Managing Director Tulsi R Tanti said in a statement.

Earlier this year, Suzlon announced its partnership with African Clean Energy Developments (ACED), African Infrastructure Investment Managers (held by Old Mutual Investment Group (South Africa) and Macquarie Capital) and AFPOC.

ACED Managing Director Thomas Donnelly said, “This is an important milestone for the project, ACED and for South Africa. The Cookhouse project marks a major first step in our plans to build a 1 GW renewable energy portfolio over the next three years, with our 200 turbine agreement with Suzlon at the core of our plans.”
Agencies

With a total capacity of 350 megawatts, these projects will complete the first phase of India’s solar mission, which envisages installation of 20 gigawatts of solar capacity in several phases by 2022 to supplement electricity generated by thermal, hydroelectric and nuclear energy sources.

In the current bidding round, 28 solar power projects — ranging from 5 MW to 50 MW — will be given to the shortlisted companies, said the executives from NTPC Vidyut Vyapar Nigam Ltd., a unit of state-run power utility NTPC Ltd.

NTPC Vidyut will offer the contracts to the companies by the end of this month, the executives said. Long-term agreements to purchase power from these projects will likely be signed in January, they added.

As many as 154 companies had put in bids for the projects, quoting the tariff at which they would sell power. Anil Kumar Agrawal, chief executive of NTPC Vidyut, said the lowest bid had come in at 7.49 rupees ($0.15) a kilowatt hour. “The response [to the bidding round] has been surprising and encouraging at the same time,” he added.

He didn’t name the shortlisted companies. The three executives said the companies shortlisted to allot bigger projects include Welspun Solar, Azure Power India Pvt. Ltd., Green Infra Ltd. and Kiran Energy Solar Power Pvt. Ltd.

Others include KSK Energy Ventures Ltd’s unit V.S. Lignite Power Pvt. Ltd., Sujana Towers Ltd., Mahindra Group’s joint venture Mahindra Solar One and Essel Group’s Essel Infraprojects Ltd., the executives said.

They said the response to the current round of bidding has been much better than the previous one, when 620 MW of projects were awarded. A lukewarm response to the first round had prompted the government to relax rules such as the timeframe for starting projects and expanding capacities.

Projects awarded in the two rounds of the first phase need to start producing electricity by March 2013.
Agencies

The lowest bid in India’s national solar auction came from Solairedirect SA, France’s second-largest producer, who offered on Dec. 2 to sell photovoltaic-based electricity at 7,490 rupees ($147) a megawatt-hour. That’s less than half the rate the government proposed and 38 percent below the average price set in a previous round in December 2010.

“Astonishingly competitive pricing in the latest auction,” Anand Mahindra, managing director of Mahindra Group, whose solar unit won two of the 28 contracts awarded for the solar plants, said in a Twitter feed that was confirmed by his spokeswoman Roma Balwani. “The sun appears to be shining on India’s solar power program.”

In clean-energy auctions this year in Brazil, Uruguay and Peru, wind farm and solar park developers have won contracts to supply power at rates nearing or below fossil fuel-based power. Global solar power prices are plunging because of declining equipment costs, with the spot price of solar panels dropping about 40 percent this year as manufacturers, especially in China, ramped up production, according to Bloomberg New Energy Finance.

Solar power may equal the cost of fossil fuel-based electricity sold to commercial businesses as early as 2014 or 2015 if prices continue to fall at the rate seen in India over the past 12 months, said Mohit Anand, senior consultant at Bridge to India Pvt., a New Delhi-based advisory firm. KPMG LLP predicted in May solar power may be as cheap as coal by 2017.
Discount Bids

Under India’s program, the government proposed to buy solar power at 15,390 rupees a megawatt-hour. Companies bid to sell at a discount to that price in a process known as a reverse auction. Those offering the lowest rates win and are awarded the rights to build plants with capacities of as much as 20 megawatts each.

Solairedirect’s offer is the third cheapest on record globally behind a bid for $110 a megawatt-hour in China and $120 in Peru, according to Jenny Chase, the Zurich-based head of solar analysis at Bloomberg New Energy Finance.

“Manufacturers are keen to offer discounts and to defer payments because things are so competitive right now,” Anand said. “Costs are going down and that’s really reflected in these bids.”

The average bid of the 28 winning projects was 8,780 rupees. That’s a nearly 30 percent fall from the average solar power rate set by India’s first auction last December and 35 percent above the wholesale price of coal-based electricity on Dec. 2, according to prices on the Indian Energy Exchange.
Winners

The auction awarded 350 megawatts of capacity and was the second under India’s national Solar Mission program that’s positioning the country to become one of the world’s fastest- growing solar markets by installing 20,000 megawatts, equivalent to about 18 nuclear plants, of sun-powered capacity by 2022.

The biggest contracts for 20-megawatt projects were won by Indian developers who have already begun building smaller plants in the country. They include Welspun Group backed by Leon Black’s Apollo Global Management LLC, Mahindra Group’s solar unit, World Bank-backed Azure Power India Pvt. and Kiran Energy Solar Power Pvt. whose investors include Bessemer Venture Partners, an early funder of Skype Technologies SA.

Other companies that won 5 to 15-megawatt size projects included GAIL India Ltd. (GAIL), the nation’s biggest natural gas distributor, Fonroche Energie, a French solar-panel maker, Green Infra Ltd., which bought BP Plc’s Indian wind farms in 2009, and Sunborne Energy Holdings LLC backed by billionaire Vinod Khosla.

The winners are required to buy solar cells domestically. India’s three largest traded makers of the cells used in solar panels are Indosolar Ltd. (ISLR), Moser Baer India Ltd. (MBI) and Websol Energy Systems Ltd. (WESL) Overseas manufacturers such as First Solar Inc. (FSLR) and Sharp Corp. may also benefit because their thin-film technology is exempt from the local sourcing rules.

The companies will have seven months to arrange financing and 13 months to complete the plants, according to government guidelines on the website of NTPC Vidyut Vyapar Nigam Ltd., the state-run power trader overseeing the process.
Agencies

The plant marks Reliance Power’s first foray into solar energy and is part of its strategy to expand its renewable energy portfolio. ADB is providing a long-term loan of up to $48 million to finance the 40 megawatt solar power project located in Jaisalmer district in the western state of Rajasthan.

Reliance group firm Reliance Infrastructure will buy the electricity under a long term power purchase agreement. The power will be distributed to households in Mumbai, the country’s financial capital. The project, expected to cost about $147 million, is scheduled to be completed by the second quarter of 2012, the statement posted on ADB’s site, said.

The Export Import Bank of the United States is also providing funding for the project. ADB said it aims to help develop, finance and commission 3,000 MW of solar power generation capacity in its developing member countries by mid 2013.
Agencies