Energy News Monitor

In September 2009, leaders of the G20 countries committed to a war on fossil fuel subsidies to achieve the goals of energy security and climate protection. Research and advocacy activities to understand and combat fossil fuel subsidies were accelerated in OECD (organisation of economic cooperation & development) countries. The International Institute for Sustainable Development (IISD), the World Bank (WB), International Monetory Fund (IMF) and the International Energy Agency (IEA) were among the front-line forces in the war against fossil fuel subsidies. The World Energy Outlook 2010, an annual publication of the IEA carried a special section on fossil fuel subsidies that observed that the subsidy-phase out between 2011 and 2020 would reduce primary energy demand by 5.8 percent (equivalent to the then energy consumption of Japan, Korea, Australia and New Zealand combined), reduce oil demand by 6.5 mb/d (million barrels per day) equal to a third of US oil demand by 2020 predominantly in the transportation sector and reduce CO2 (carbon di oxide) emissions by 6.9 percent by 2020 or 2.4 GT equivalent (giga tonnes equivalent) equal to the emissions of France, Germany, Italy, Spain and UK combined. The report pointed out that ‘notable reforms’ in countries including India, China, Russia and Indonesia to bring domestic energy prices in line with world prices would contribute to a reduction in the cost of energy subsidies. In 2008, oil product subsidies estimated at US$ 312 billion dominated total subsidies followed by natural gas at US$ 204 billion and coal at US$ 40 billion. Referring back to the ‘450 scenario’ which is one of the scenarios projected by the IEA in its 2009 World Energy Outlook reports, the IEA subsidy study concluded that implementing the Copenhagen accord and the G20 subsidy commitment would reduce emissions by 70 percent and 30 percent respectively by 2020 and put the world on track to meet the 2°C target by 2020.

The core argument was that subsidies were offered to keep the price of fossil fuels below the level in an undistorted market, leading to higher levels of consumption than would occur in their absence. IEA’s subsequent publications continued to discuss fossil fuel subsidies as a key barrier to adoption of climate friendly policies in developing countries. The IISD introduced a dedicated programme on energy subsidies called ‘Global Subsidies Initiative’ under which many research programmes were carried out.

The global subsidies tracker that includes data for 192 countries for 2020 and partial data for 82 major economies for 2021 shows that fossil fuel subsidies have not reduced as expected. Subsidies were driven by energy prices, geopolitical events such as the conflict in Ukraine and global challenges such as COVID 19 rather than by climate change concerns. In 2010, fossil fuel subsidies were estimated at US$621.25 billion (nominal US$). In 2013 fossil fuel subsidies touched a peak of US$844.81 billion on account of crude oil prices that remained above US$100/barrel (b) from 2010-2014. In 2016, fossil fuel subsidies fell to US$ 465.16 billion reflecting the fall in oil prices to about US$ 50/b that year. In 2021, fossil fuel subsidies increased to US$731.65 billion because of the dramatic increase in the price of globally traded natural gas as well as the increase in the price of crude oil and coal. In 2010-22, global energy consumption has increased by over 18 percent and CO2 emissions have increased by over 10 percent. Reports from IISD, WB, IMF and the IEA have assigned blame on the unwillingness of governments to reduce fossil fuel subsidies. A survey-based study by these agencies conducted in developing countries including India shows that most people agreed that fossil fuel subsidies must be phased out to address climate change. This added credibility to the claim that people are willing but governments are weak.

For India which is listed among key subsidy offenders, none of the information generated by the WB, IMF, IEA and IISD programmes is new. Indian policy makers know that the subsidy schemes are well intended but leakages in the system, both financial and social, are counterproductive in that they serve interests of unintended constituencies. They also know that energy subsidies impose extreme stress on public finances and that the schemes only partially meet the goals of the subsidy policy which is to improve energy access to the poor.

In India, petroleum subsidies (for Kerosene and LPG) have been phased out. Even when subsidies for LPG and Kerosene were in place, the tax take on petroleum products such as diesel and petrol was more than three times the subsidy outgo. Today taxes on petroleum products account for a major share of federal and regional revenue.

However, “subsidies” persist on electricity. The ‘time inconsistency’ of electricity subsidies whereby the near-term benefits of subsidies (such as electoral victories) are bestowed on the current regime while costs are passed on to future regimes does not offer any incentive for changing the system. Well-organised minorities, the articulate and politically active Indian middle class (also the biggest electricity consuming group that appropriates most of the subsidies on electricity intended for the energy poor in India) prevents reform and re-targeting of electricity subsidies to the poor who are the intended beneficiaries.

In India, electricity “subsidies” are price distortions and cross-subsidies rather than under-pricing of electricity. The price distortions are a part of India’s well intended energy redistribution schemes to compensate for economic and social inequalities. However, electricity price interventions and cross subsidisation misallocates resources – both energy and investment – in addition to facilitating widespread leakage and abuse in the sector. In order to compensate for this gross inefficiency, electricity prices are maintained at the highest possible level in India. This inefficiency penalty imposed on the average Indian energy consumer is so high that when compared to energy prices in other countries in purchasing power parity terms energy prices in India are often among the highest in the world. If the administrative and economic inefficiencies in energy pricing in India are corrected, the price of energy is likely to decrease rather than increase. This may lead toan increase in energy consumption and a consequent increase in CO2 emissions.

In the case of petroleum, the build-up in prices is largely a result of federal and regional taxes which reflects the inefficiency in distributive policies, social and economic sector reforms and governance of the economy in general. Indirect taxes on petroleum are easy to collect and even easier to appropriate. In the case of electricity, the build-up in prices is largely a result of political inefficiency, theft and technical losses along the way. Electricity available at a price of about INR 1/kWh (kilowatt hour) at the bus bar transforms into INR 6-7/kWh when it is delivered to the consumer. The huge penalty for inefficiency that is built into the price of energy is conveniently hidden by the subsidy narrative. The Indian energy consumer is not subsidised; he is subsidising the inefficiency in the sector. For sustainable reform of the energy sector, the subsidy narrative needs to be reframed as one of inefficiency and poor governance rather than a simplistic issue of under-pricing energy.

The primary reason behind difficulty in phasing out subsidies arises from the fact that energy subsidies (both for non-fossil fuels and for fossil fuels) are deeply rooted in the political economy of countries. The failure to reform subsidies, not just in India but in many other countries including rich countries such as the United States which offers substantial overt subsidies to fossil fuel producers, lies in the political economy of subsidies making victory in the war against fossil fuel subsidies elusive.

Electricity Trade

The total trade volume of the Indian Energy Exchange grew by 8 percent year-on-year (y-o-y) to 8,251 million units (MU) in May. The average spot power price during May 2023 was 30 percent lower at INR 4.74 per unit (kWh) against INR 6.76 per unit in May 2022, due to an improving supply-side scenario, leading to increased liquidity, and cooler weather conditions. While an increase in power demand is expected in the coming months, the supply-side liquidity is likely to further improve due to enhanced coal supply, reduction in e-auction coal prices and consistently declining imported coal and gas prices.

According to Sterlite Power, it has started aerial operations to expedite the construction of its flagship Mumbai Urja Marg Project (MUML). To fast-track the completion of 400 kilovolt (kV) transmission corridor connecting Padgha to Kharghar, which links Mumbai to the national grid, Sterlite Power has proactively deployed lightweight helicopters to overcome the challenges of terrain and speed up material transfer, the transmission infrastructure developer and solutions provider said.

A power ministry-constituted panel has suggested a roadmap outlining the interventions for the near, medium, and long term for the development of the electricity market. The interventions suggested by the panel include setting up a mechanism to monitor whether adequacy of supply is being maintained by the state utilities, enhancing the efficacy of the Day-ahead Market, introducing a market-based mechanism for secondary reserves, and implementing 5-minutes based metering, scheduling, dispatch, and settlement. The proposed changes also include demand response and aggregation, which could reduce reserve requirements and lower electricity costs, according to the power ministry.

Discom Reform

Electricity consumers in Uttar Pradesh (UP) will be able to legally claim compensation for a default in the delivery of services by the UP Power Corporation Ltd (UPPCL). The UPPCL has implemented the law made in this regard by the UP Electricity Regulatory Commission (UPERC) more than three years ago. According to the order issued by UPPCL, consumers can register their complaint about a service default as well as their compensation claim on the corporation’s 1912 toll-free number, in case the complaint is not resolved within the specified timeframe. The Standard of Performance Regulations was notified by the UPERC in December 2019, fixing the maximum time for the delivery of services.

Demand Growth

According to Union Minister of State for Power Krishan Pal Singh, the people of Rajasthan are facing a power crisis due to the failure of the state government. As per the minister there is no shortage of electricity in the country as in the neighbouring state Haryana, 24 hours electricity is being made available in the villages and cities.

Generation

According to Power and New & Renewable Energy Minister RK Singh, the government will crackdown on developers of power projects, who miss the scheduled commercial date of operation or deadline to complete the project., He said the electricity generation capacity addition is a big challenge, as people are sitting on several projects won under the bidding process. He said that all these projects (power) are won under the bidding process and if they miss the SCOD (scheduled commercial date of operation or deadline to complete the project), then the developer will be banned from participating in project bidding for one year. On the second such incident, the developer will be banned for five years, he said. Power project developers are waiting for demand to grow but this will not happen, he said. He said that until battery energy storage becomes viable, India would have to add thermal power capacity to meet the demand. Last year, our power demand grew by eight percent. This year it is growing at 10 percent and it will continue to grow because our economy is growing at seven percent, he stated. He emphasised that net zero is important but what is more important is industry does not suffer from the shortage of electricity.

Regulation and Governance

The Karnataka government issued an order to implement the ‘Gruha Jyoti’ scheme, which guarantees to offer up to 200 units of electricity free of cost to domestic consumers, from 1 July. The government order mentioned that the scheme cannot be availed by commercial consumers. Besides the introduction of ‘Gruha Jyoti’, the government also issued orders to fulfi l the ‘Shakti’ free bus travel for women scheme from 11 June. 200 units of free power will be provided, not only to the owners, but even the tenants are eligible to avail the scheme. Under the scheme, the government will take into account the one-year average power consumption in the 2022-23 financial year and will give free electricity up to 10 percent more than the average usage. If a consumer uses about 150 units of electricity a month on an average, he can get free power, up to 165 units of power. If he exceeds the limit, then he will have to pay for the rest of the units consumed, which will be the net power consumption. However, if the usage exceeds 200 units of power, the consumer will have to pay the full amount of the electricity bill. Consumers have to pay the arrears till June 30 within three months. The electricity metre usage and the metre reading have been made mandatory. The total electricity consumption will be displayed in the monthly bill, the order said. Every beneficiary has to link the customer ID or account ID with an Aadhaar number. Any consumer cannot integrate more than one electricity metre with the scheme. Those who want to avail benefits will have to enrol themselves in the ‘Seva Sindhu’ portal of the state government. The government mentioned that the beneficiaries of ‘Bhagya Jyoti’, ‘Kuteera Jyoti’ and ‘Amruta Jyoti’ schemes, which are various existing schemes offering free electricity to the economically and socially backward communities, will be merged with the ‘Gruha Jyoti’ scheme. The government said the cost of the free electricity provided to the consumers will be compensated to the electricity supply companies.

In a big relief to electricity consumers, the Uttar Pradesh Electricity Regulatory Commission (UPERC) announced keeping the power tariff unchanged for 2023-24. This would be the fourth year in a row that the power tariff in UP has not been increased – the last revision was done in 2019-20. The power consumers, essentially in the urban areas, would thus continue to pay their electricity bills as per the earlier slabs. The electricity regulator which held separate public hearings in all distribution companies junked the proposal put forth by the UP Power Corporation Limited (UPPCL) suggesting an average tariff hike of 16 percent. The UPPCL had proposed a tariff hike of 18 percent for urban domestic consumers, 16 percent for industries, around 12 percent for agricultural and 17 percent for lifeline category consumers (rural/ urban poor who are provided power at a low rate). Announcing the tariff order for 2023-24, UPERC said that tariff was not increased because the expenditure suggested by the UPPCL was “not prudent enough” and therefore the proposed tariff hike was uncalled for. The commission, however, approved only 10.30 percent, saying that the repercussions of line losses, essentially because of the power theft, should not be passed on to the consumers. The UPERC, at the same time, approved the subsidy of INR 152 billion which the corporation would be getting from the state government. This subsidy includes the amount which is being used to provide free power to the farmers having a tube well connection. Welcoming UPERC decision, UP Rajya Vidyut Upbhogta Parishad said that the commission took the decision boldly as well as rationally. The Parishad, notably, had also petitioned the commission claiming that the corporation owed more than INR 250 billion (bn) (US$3.04 bn) to the consumers.

Settling a two decade-old dispute between power suppliers and auction purchasers of premises which have had past electricity dues, the Supreme Court (SC) has ruled that the new owners can’t be denied electricity connection but are bound to make good the past dues which stood against the purchased property. A bench of Chief Justice D Y Chandrachud, Justices Hima Kohli and P S Narasimha decided 19 cases, which had been pending adjudication for nearly two decades in the SC. The commonality that webbed the cases together was—supply of electricity was discontinued due to the failure of the previous owners to pay the dues for consumption of electricity on the premises. The new owner of the premises is required to clear the electricity arrears of the previous owner as a precondition to availing electricity supply will have a statutory character as the implication of the expression “as is where is” basis is that every intending bidder is put on notice that the seller does not undertake responsibility in respect of the property offered for sale with regard to any liability for the payment of dues, like service charges, electricity dues for power connection, and taxes of the local authorities, the bench said. The bench said the power of the electricity supplier to initiate recovery proceedings by filing a suit against the defaulting consumer is independent of the power to disconnect electrical supply as a means of recovery under Section 56 of the 2003 Act. However, keeping in view the long pendency of the petitions, the CJI-led bench used its omnibus powers under Article 142 of the Constitution to waive the outstanding interest accrued on the principal dues from the date of application for supply of electricity by the auction purchasers.

Haryana Chief Minister (CM) Manohar Lal Khattar announced to withdraw a circular issued by the Uttar Haryana Bijli Vitran Nigam (UHBVN) to impose penalty on the cultivators caught stealing electricity for agriculture purposes. He said the circular was issued on the recommendation of the Haryana Electricity Regulatory Commission (HERC) and that he had taken a strong exception to issuance of the circular as the formula applied to fix the penalty was illogical. He said the state government is not bound to follow such orders of the HERC as the state government bears the burden of free power to the farm sector. He said the circular in question directed to impose huge fines (up to INR 6 lakh) on farmers accused of power theft. He said ‘Antyodaya Urja Suraksha Yojana’ will be launched soon. Under this, families with less than INR 1 lakh annual income and whose electricity connections have been disconnected will be given electricity connections by waiving off the arrears. He said either 50 percent of the principal amount of the outstanding electricity bills of such Antyodaya families or the average electricity bill of maximum one year (whichever is less), will be taken from them. For example, if the average annual electricity bill of a family is INR 8,000 or INR 10,000 (US$97.3 to US$121.7) and their total outstanding amount is INR 6,000; then out of INR 6,000, only INR 3,000 will be taken from such families in instalments.

Even as the Opposition castigated the Aam Aadmi Party (AAP) government for announcing a hike in electricity tariff, Punjab Power Minister Harbhajan Singh defended the move with an assurance that the hike won’t affect the common people as the cost of increased electricity rates will be borne by the state government. The Punjab State Electricity Regulatory Commission (PSERC) announced a hike in the power tariffs, a move which Opposition parties termed as the first gift of the ruling AAP to people after the party’s victory in the recently-concluded Jalandhar Lok Sabha bypoll. Slamming the move, they demanded withdrawal of the power tariff hike. As per the new tariff rates announced by the PSERC, power consumers under various categories will now have to pay 25 to 89 paise more for each unit and fixed charges per kilo watt. While the domestic consumers will have to pay up to INR 15 (US 0.18 cents) per kilowatt as fixed additional charges, the non-residential consumer will have to pay 28 to 41 paise more per unit along with INR 25 to INR 30 as fixed charges. In defence of the power tariff hike, he said the power tariff in many states is very high in comparison to that of Punjab. There has been no increase in electricity rates in the state for the last one year. He assured that free power to farmers, power subsidy to industry and 600-unit free electricity for domestic consumers will continue as usual. As the power subsidy will continue, no scheme will be stopped, he said.

Rest of the World

China

China’s electricity generation grew in line with the long-term average during the first four months of the year as the economy recovered from the end of COVID-19 lockdowns and the exit wave of the pandemic. Total electrical generation increased by 128 billion kilowatt-hours (4.9 percent) between January and April compared with the same period in 2022, according to the National Bureau of Statistics (NBS). China’s burgeoning electricity consumption is so huge the government has no choice but to follow an “all of the above” strategy even as it tries to boost the share of generation from low-emission sources. Renewable wind and solar provided 14 percent of generation up from just 3 percent in 2014, while nuclear supplied 5 percent up from 2 percent.

Other Asia Pacific

A searing heatwave in Bangladesh spurred the closure of primary schools and triggered frequent power cuts, worsening conditions for residents unable to run fans to cool themselves as weather officials warned relief was not imminent. Bangladesh could face power cuts for two more weeks, Nasrul Hamid, minister of state for power, energy and mineral resources, said as a fuel shortage sparked shutdowns of several power-generating units, including its biggest coal-fired plant. The heatwave comes as the country already grapples with power cuts that have hurt its economy in recent months, including its crucial apparel sector that accounts for more than 80 percent of its exports.

Sri Lanka’s parliament removed the head of the country’s utilities regulator after he blocked a huge electricity tariff increase that was in line with demands from the IMF. The legislature voted 123 to 77 to drop Janaka Ratnayake as the boss of the Public Utilities Commission with immediate effect, making him the first head of a utilities regulator to be sacked in Sri Lanka’s history. Ratnayake had resisted a second tariff increase of up to 275 percent in February on top of a 264 percent hike six months earlier at the height of an economic crisis. The government overruled Ratnayake’s objections and went ahead with February’s rise, saying it was crucial to reduce losses at Sri Lanka’s state-owned electricity company.

Africa & Middle East

The Federal government said unless the private sector invests about US$3.5 billion yearly, raising electricity generation capacity to 30,000 megawatt (MW) in the next seven years would remain a mirage. This brings Nigeria’s investment needs to at least a cumulative US$24.5 bn if the aspiration of raising electricity capacity to 30,000 before 2030 will be realistic. While Nigeria privatised the electricity sector in 2013, hoping to turn around the despondent state of the sector and bring to reality the year-long aspiration for reliable and stable electricity supply, the initial optimism remains elusive as the country’s actual generation remains around 4,000 MW.

North & South America

Siemens Energy is considering setting up production in the United States (US) to help modernise the country’s power grid, keen for a slice of what is expected to be a multi trillion-dollar market following the Inflation Reduction Act (IRA). The deliberations are part of a broader rethink at the German power conglomerate to expand its foothold in the US, where it makes 15 percent of sales, as favourable regulation is providing a boost to renewables and hydrogen capacity that requires state-of-the-art energy networks. US power grids are not directly benefiting from the IRA but will require around US$2 trillion in investments by 2050 to make sure that energy sources eligible for support, including renewables and hydrogen, can be integrated.

Siemens Energy has signed a US$200 million deal with Brazil’s Eletrobras to modernise a key electricity transmission line that runs from the gigantic Itaipu hydroelectric plant. The project, worth some 1 billion reais (US$199.87 million) and expected to be completed by 2026, will upgrade over 800 kilometres of the energy transmission line that connects the Itaipu plant with the key states of Sao Paulo and Parana.

12 June: India and the UAE (United Arab Emirates) set a target to increase the non-oil trade from US$48 billion to US$100 billion by 2030. The goal to achieve US$100 billion non-oil trade was set in the first meeting of the Joint Committee of India-UAE Comprehensive Economic Partnership Agreement (CEPA). The agreement was implemented on 1 May last year. The target of US$100 billion will not include the oil trade. Commerce and Industry Minister Piyush Goyal said that an India-UAE CEPA council will be set up to further facilitate the implementation of the agreement.

11 June: The Punjab government increased the Value-Added Tax (VAT) on fuel by 10 percent, leading to an increase in the price of petrol and diesel in the state by 92 paise per litre and 88 paise per litre, respectively. According to a notification issued by the state government, the hike in VAT will lead to an increase in the prices of petrol and diesel by one rupee per litre. In Mohali, petrol will now cost INR 98.95 per litre, while diesel will cost INR 89.25 per litre. In Chandigarh, petrol will cost INR 96.20 per litre, while diesel will cost ₹84.26 per litre. This is the second time this year that the prices of fuel have been increased in the state. Petroleum Minister Hardeep Singh Puri said that oil companies may reduce petrol and diesel prices if international crude oil prices remain stable and the companies have a profitable next quarter.

9 June: Indian sales of diesel and petrol surged to records in May, in a rare bullish sign for global oil markets. Diesel sales in the world’s third-biggest crude importer rose 13 percent last month from a year earlier, according to government data. Petrol was up 11 percent, while overall consumption, which also includes fuels such as liquefied petroleum gas and naphtha, increased 9 percent. The strong sales came after the Indian economy beat expectations to expand by 6.1 percent in the quarter through March, although growth is expected to slow through the rest of this year. The uptick in buying will also be a fillip for India’s state-run fuel retailers, who have kept diesel and gasoline prices unchanged since April last year.

9 June: Hindustan Petroleum Corporation Ltd (HPCL) launched a pilot study on vehicles using E27 fuel and Ethanol Blended Diesel Fuel, making it the first Oil Marketing Company in India to undertake such a comprehensive research program, the ministry of petroleum & natural gas said. The move aligns with the roadmap for ethanol blending in India by 2025, which aims to promote the adoption of ethanol blending in gasoline. According to the ministry, preliminary studies conducted on vehicles fueled with E27 have shown significant reductions in emissions such as carbon dioxide among others, compared to traditional gasoline. As part of the pilot, HPCL will also evaluate ethanol-diesel trials on passenger cars, targeting a mileage accumulation of 20,000 km initially. India’s next milestone in the ethanol blending program is achieving 27 percent blending beyond E20 fuel.

11 June: Indian Oil Corporation (IOC) has walked away with half of the natural gas that Reliance Industries Ltd (RIL) and its partner BP of the UK offered in the latest auction of the fuel used to generate power, produce fertiliser, turned into CNG and used for cooking purposes.IOC got 2.5 million standard cubic metres per day (mmscmd) out of the 5 mmscmd of gas auctioned last month. The oil refining and marketing company, which was the top bidder even in the previous auction of gas from the eastern offshore KG-D6 block of RIL-BP, bid the volumes on behalf of seven fertilis er plants. City gas companies including GAIL Gas Ltd, Mahanagar Gas Ltd, Torrent Gas, Indian Oil Adani Gas Ltd, and Haryana City Gas secured a total of 0.5 mmscmd of gas for turning into CNG for sale to automobiles and piped to household kitchens for cooking purposes. GAIL (India) Ltd and refiner Hindustan Petroleum Corporation Ltd (HPCL) got 0.6 mmscmd each while Gujarat State Petroleum Corp (GSPC) walked away with 0.5 mmscmd and Shell another 0.2 mmscmd. RIL-BP, which two years back reversed the declining trend in domestic gas output by bringing to production their second wave of discoveries in the KG-D6 block lying deepsea of the Bay of Bengal, are now ramping up supplies. Natural gas, a cleaner-burning, efficient fuel, is being seen as a transition fuel for nations to move from polluting hydrocarbons to zero-emission fuels. RIL-BP in the latest tender offered 5 mmscmd of gas for a period of 3 years starting June 1. Bidders were asked to quote a variable ‘v’ over and above the JKM price, the spot market benchmark for liquefied natural gas (LNG) delivered to Japan and South Korea. The e-auction started on 19 May and ended on 23 May – the longest duration of an auction since the time operators were allowed to sell fuel through open tender. At the end of the e-auction, gas was sold to 16 buyers at a price of JKM + (plus) USD 0.75 per million metric British thermal units (mmBtu) for 3 years. The current JKM price of US$9.2 per mmBtu, the price for KG-D6 gas comes to around US$10. This rate compares with the capped price of US$6.5 per mmBtu that Oil and Natural Gas Corporation (ONGC), the state-owned behemoth, gas for fuel produced from legacy or old fields. RIL-BP had in April sold 6 mmscmd of gas. IOC had walked away with almost half of the 6 mmscmd of gas sold in an e-auction on April 12 while GAIL bought 0.7 mmscmd, Adani-Total Gas Ltd 0.4 mmscmd, Shell 0.5 mmscmd, GSPC 0.25 mmscmd and IGS another 0.5 mmscmd. Reliance has so far made 19 gas discoveries in the KG-D6 block. Of these, D-1 and D-3 — the largest among the lot — were brought into production in April 2009, and MA, the only oilfield in the block, was put into production in September 2008. While the MA field stopped producing in September 2018, output from D-1 and D-3 ceased in February 2020. Since then, RIL-BP is investing US$5 billion in bringing to production three deepwater gas projects in block KG-D6 — R-Cluster, Satellites Cluster, and MJ — which together are expected to meet about 15 percent of India’s gas demand by 2023.

13 June: Around one dozen illegal coal mining tunnels were demolished in the deep forest area of Shikaripara block. The administrative team was led by district mining officer Krishna Kumar Kisku. A heavy contingent of security personnel of the district police force and the SSB were deployed at the site to thwart any attempts of the mining mafias to resist the drive.

9 June: Coal India Ltd (CIL) is holding talks with residents opposed to a mine expansion that would create one of the world’s largest operations producing the fuel. Protests against plans for the Gevra site in Chhattisgarh threaten to complicate the company’s ability to win approvals to expand annual capacity to 70 million tonnes. Output at that volume would see the site become the single biggest global source of the fossil fuel, according to Coal India. Rising power demand has pushed India to prioritise energy security and boost output of coal, which continues to account for about 70 percent of electricity generation.

8 June: The Centre announced that it had issued allocation orders to successful bidders for 22 coal mines that had been put up for sale for commercial mining. While 16 coal mines have been fully explored, the remaining six have only been partially explored. The cumulative peak rated capacity (PRC) of 22 coal mines is 53 million tonnes per annum (MTPA). The total geological reserve of six coal mines is 6,379.78 million tonnes, and the blocks are expected to generate annual revenue of INR98.31 billion and attract capital investment of INR 79.29 billion. It will, directly and indirectly, employ 71,467 people. With the allocation of these mines, the ministry has issued vesting orders for a total of 73 mines under commercial auctions with a total PRC of 149.304 MTPA.

7 June: The government approved the continuation of the central sector plan ‘Exploration of Coal and Lignite scheme’ with an estimated expenditure of INR 29.80 billion. The time period for the extension is from 2021-22 to 2025-26 co-terminus with the 15th Finance Commission cycle, the Cabinet Committee on Economic Affairs (CCEA) said. Under this scheme, exploration for coal and lignite is conducted in two broad stages: (i) Promotional (Regional) Exploration and (ii) Detailed Exploration in non-Coal India Limited blocks. Exploration for Coal and Lignite is required to prove and estimate coal resources available in the country, which helps in preparing detailed project reports to start coal mining. The geological reports prepared through these explorations are used for auctioning new coal blocks, and the cost is thereafter recovered from successful allocations .

7 June: After 2-3 years of prioritising coal imports along with ramping up domestic production, once again, India plans to reduce the import of coal. Union Minister for Coal and Mines Pralhad Joshi said the government plans to stop 107 million tonnes (MT) of substitutable coal imports by FY 2025. Amrit Lal Meena, Secretary, Ministry of Mines, said that the 107 MT of imported coal is used in India’s non-regulated sector, which does not include domestic coal-based power plants. India produced 893 MT of coal in 2022-23, which is an increase of 55 percent from 2013-14 when domestic coal production was 572 MT. Joshi said the government will provide INR 60 billion worth of viability gap funding (VGF) for coal gasification projects. This will be in addition to the plan of providing GST refunds, which Meena said is in the final stage of formalisation.

13 June: The real time data of State Load Dispatch Centre (SLDC) Delhi showed that the peak demand was 7098 MW. The scorching heat in the national capital pushed the peak power demand above 7000 megawatt (MW) for the first time this summer, discom said. The real time data of State Load Dispatch Centre (SLDC) Delhi showed that the peak demand was 7098 MW around 3.29 pm. Power discoms— BRPL (BSES Rajdhani Power Limited) and BYPL (BSES Yamuna Power Limited)— “successfully” met the peak power demand—3103 MW and 1615 MW, respectively in their areas. Tata Power Delhi Distribution Limited (TPDDL) has successfully met the power demand of 2055 MW peak demand so far. Delhi’s peak power demand has seen huge variations. It has increased from 4,390 MW on 1 June to 7098, an increase of 2,708 MW or 61 percent, the discom said. Last year in June, there were nine such occasions when Delhi’s power demand exceeded 7000 MW, with June 29 setting an all-time high record of 7,695 MW. Additionally, June 2022 saw the power demand crossing the 6000 MW mark on 11 occasions and the 5,000 MW mark on eight occasions. In 2018, the peak power demand of the city breached the 7000 MW mark for the first time, reaching a peak of 7016 MW. The expected peak power demand of around 8100 MW this year will be a staggering increase of approximately 280 percent compared to the peak power demand of 2879 MW recorded in 2002. The BSES discoms (distribution companies) are gearing up to ensure uninterrupted supply to meet the power demand of around 20 million residents in South, West, East and Central Delhi. The arrangements include long term power purchase agreements and banking arrangements with other states. The BSES discoms will get up to 630 MW (BRPL up to 330 MW, BYPL up to 300 MW) of power through banking arrangements.

12 June: Damodar Valley Corporation (DVC) will double its annual power generation over the next seven years, its chairman Ram Naresh Singh said. Singh said DVC aims to add 8,000 MW of annual power generation from the current 7,000 MW, to achieve its target of 15,000 MW of annual power output by 2030. The corporation will invest an estimated INR 600 billion for installing new power plants to achieve the target, he said. He said the corporation is currently supplying power to Delhi, Jharkhand, Punjab, Haryana, West Bengal and Gujarat, and also to neighbouring Bangladesh.

12 June: Amid statewide protests and gherao of Odisha Energy Minister P K Deb’s official residence over frequent power outage during the scorching summer heat, Chief Secretary P K Jena asked power distribution companies (discoms) to promptly address the electricity supply problems. Jena asked the discoms to take immediate steps whenever power disruption is reported and to carry out quick restoration work, particularly after nor’wester or any other weather-related incidents. The issue was highlighted following power supply disruption and frequent power cuts in the state capital following 8 June nor’wester. The Chief Secretary also stressed on proper coordination between the energy department and private power discoms to take preventive measures to avoid power outage.

10 June: The power ministry has asked the Central Electricity Regulatory Authority (CERC) to initiate the process of coupling multiple power exchanges, a mechanism which seeks to ensure uniformity in price discovery of energy at trading platforms. At present India has three power exchanges—Indian Electricity Exchange (IEX), Power Exchange of India (PXIL) and Hindustan Power Exchange (HPX). In the present scenario, buyers and sellers at each exchange do trading of electricity and discover spot price separately at these exchanges. After coupling of exchanges, the price discovery would be uniform. The IEX has the largest market share of 88 percent in total power trade at multiple exchanges in India.

8 June: The Gruha Jyothi scheme for free electricity, up to 200 units, to over 21.4 million consumers in Karnataka, is set to be implemented from July and registration of households will start from 15 June, it was announced. The scheme will cost the public exchequer INR 130 billion annually. There are 21.6 million domestic consumers in the state. Of them 2.14 crore consumers are using less than 200 units and their annual consumption is approximately 13,575 million units. Energy Minister K J George said that an average calculation process of one year has been done for the estimation of monthly electricity consumption of 21.4 billion household consumers. Considering the average consumption for the 2022-2023 financial year, monthly usage will be calculated for each consumer by giving an additional 10 percent on their average usage. However, the maximum free electricity usage cap is restricted to 200 units. If the fixed average unit of electricity consumed per household is less than 200 units, the household consumer need not pay any fee. If the units used are more than the average, only the extra units will be charged. However, if more than 200 units are used, the full fee will have to be paid, George said. If consumers use more than average consumption limits, bills will be generated to only difference of units excluding fixed energy charges and Fuel and Power Purchase Cost Adjustment Charges (FPPAC). If the consumers’ monthly average usage exceeds 200 units they have to pay the full amount of the bill. If consumers fail to pay their arrears within three months, their connections will be disconnected. All the house owners, tenants, and authorised users can be the beneficiaries of the Gruha Jyothi scheme. To avail the scheme, the consumers must link their Aadhaar numbers with the Customer ID/RR number or Account ID mentioned in the bill and submit the application through Seva Sindhu portal. Even if the Aadhaar address is different, one can complete the registration process by providing other relevant proof that he is a consumer at a particular address, George said. The scheme will not be applicable to commercial consumers.

13 June: India is close to starting a mega hydropower project that has been in the works for 20 years, a key step in the country’s energy transition. NHPC Ltd will start trial runs in July for the Subansiri Lower project that runs through the states of Assam and Arunachal Pradesh in the country’s north-east. The first unit is expected to be commissioned in December. By the end of 2024, all eight units will be commissioned. Hydropower, with its ability to quickly respond to fluctuations in electricity demand, is seen as crucial for balancing the grid as intermittent generation of solar and wind power rises. However, the 2 gigawatt (GW) project, started in 2003, was delayed by protests and litigation, driven by concerns over environmental damage. The cost of the project jumped to INR 212.5 billion (US$2.6 billion), more than three times the original estimate. The National Green Tribunal allowed the work to resume in 2019 after eight years of suspension. Opposition to dams has limited the country to tapping barely a third of its hydropower potential of 145 GW. Large dams are also India’s way of boosting local economies in areas along its tense borders with China and Pakistan. As Subansiri approaches conclusion, NHPC is finalis ing plans to award construction orders for the 2.9 GW Dibang project, the biggest hydropower plant India has planned to build.

13 June: SJVN Green Energy bagged a 200 megawatts (MW) wind power project worth INR 14 billion investment in tariff-based competitive bidding conducted by Solar Energy Corporation of India (SECI). SJVN will develop the wind project anywhere in India through an engineering procurement construction (EPC) contract. The company participated in the tariff-based competitive bidding process for the selection of wind power developers for setting up 1,200 MW inter-state transmission system (ISTS) connected wind power projects in India‘s Phase-XIV conducted by Solar Energy Corporation of India (SECI). The bagged project will generate wind power at the rate of INR 3.24 per unit on a build own and operate (BOO) basis through reverse auction(e-RA) conducted on 12 June 2023. The Power Sell Agreement (PSA) is supposed to be executed after receiving the issuance of the letter of intent from the SECI. The project is likely to generate 578.16 million units of energy annually and the cumulative energy generation for 25 years would be about 14,454 million units. As per the request for solution (RFS) the project is subject to be commissioned in two years from the date of signing of the PSA. The project will boost the Centre’s carbon emission mission as it is commissioned to reduce 7,08,246 tonnes of carbon emission.

11 June: Bharat Petroleum Corporation Ltd (BPCL)’s Bargarh 2G bio-refinery which will use rice straw to produce ethanol for mixing in petrol, will invigorate a circular economy and give impetus to waste-to-wealth creation, Union Minister Dharmendra Pradhan said. Pradhan, who is the Union Minister for HRD, visited the under-construction Bargarh 2G bio-refinery site in Odisha as part of the Vikas Teerth Yatra to mark nine years of the Modi government. After producing ethanol from sugarcane, India is now pushing for producing low-carbon fuel from grains and agri waste. This is part of an ambitious programme to mix ethanol in petrol to cut down emissions as well as the country’s dependence on imports for meeting oil needs. Presently, 10 percent ethanol is mixed in petrol (10 percent ethanol, 90 percent petrol) and this volume is targeted to be doubled by 2025. The Bargarh 2G bio-refinery is part of the plan to augment the production of ethanol to meet the higher mixing target. The Bargarh bio-refinery in Odisha is being built at a cost of INR 16.07 billion and will produce 100 kilolitres per day of 1G ethanol (ethanol from rice grain) and a similar volume of 2G ethanol (ethanol from rice straw). The plant is the first of its kind in the world with rice-based 1G and 2G bio-ethanol production. Ethanol produced from the plant shall be utilised for blending with petrol under Ethanol Blended Petrol (EBP) Programme for a significant reduction in GHG emissions and savings in crude import bill for India.

9 June: Kerala can save INR 90 billion over a five-year period if they replace coal power purchases with renewable energy contracts by 2040, according to a new study. If the southern state replaces its scheduled purchases of coal power from central sector plants with new renewable energy at an average tariff of INR 3/kWh, the state would save approximately INR 9.69 billion per annum, it said. This finding comes just months after Chief Minister Pinarayi Vijayan announced that the state will aim for 100 percent renewable energy over the next 17 years. In total, a phased energy transition plan to replace all coal power contracts with renewable energy could save the state an estimated INR 18.43 billion annually by way of lower electricity costs, it said.

9 June: The BMC signed a memorandum of Understanding (MoU) with Mahanagar Gas Ltd for setting up a compressed biogas plant (CBG) in the city. The CBG plant will have the capacity to process up to 1,000 tonnes of wet waste every day. The BMC will collect the wet waste generated from hotels, restaurants, banquet halls and major vegetable markets across the city through dedicated vehicles, segregate it and deliver it to the plant, where it will be processed to produce compressed biogas. The municipality will provide the land for the CBG plant, which is expected to be set up in two years’ time. According to BMC, after work on the CBG project is complete, it will be extended further to three more phases: a biomass waste treatment plant, an organic fertiliser production plant and a green fuel production plant. The biogas produced will be used within the city. Biogas, which is purified and compressed, can also be used as fuel for vehicles. Mumbai generates about 6,500 tonnes of daily waste, including 3,500 tonnes wet waste. The CBG plant is expected to recycle about one-third of the 3,500 tonnes of wet waste. According to BMC, the proposal for setting up the CBG plant was mooted by the Union ministry of petroleum and natural gas. Mahanagar Gas Ltd is an enterprise of the Maharashtra government and GAIL, which is a PSU under this ministry.

8 June: Tata Power Renewable Energy Ltd through its subsidiary TP Vardhaman Surya Limited, received a letter of award (LOA) to set up 966 MW RTC (round-the-clock) hybrid renewable power for Tata Steel. Tata Steel, with an annual crude steel capacity of 35 million tonnes per annum, is one of the world’s most geographically diversified steel producers. This project will fulfil a significant part of Tata Steel’s green energy requirements in India, saving 23,89,160 tonnes of CO2 (carbon dioxide) emissions annually. Tata Steel will invest 26 percent equity in the said project. The project will be commissioned by 1 June 2025 as per the arrangement, the company said.

7 June: KPI Green Energy said it has got a letter of intent (LoI) from a private player to develop a 40 megawatts (MW) hybrid green energy project in Gujarat. The capacity includes 21.50 MW wind and 18.5 MW solar, the company said. This LoI is a significant milestone for the company, showcasing its strong position in the renewable energy market.

13 June: Equinor plans to expand its oil production in Brazil more than fivefold over the next decade, while also eyeing green energy projects especially in offshore wind power. The company aims to boost output to more than 500,000 barrels of oil equivalent per day (boed) by 2033 from current output of nearly 90,000 boed, Equinor Brazil vice president Lars Jetlund Hansen said. Equinor is the second-largest oil producer in the country after Petrobras. The company acquired a majority stake in the offshore field in 2016 and expects to begin pumping mostly light crude from it in 2025. US (United States) oil giant ExxonMobil and Portugal’s Petrogal own stakes in Bacalhau, which will be developed with one of the largest floating, production, storage and offloading (FPSO) vessels in the country, with daily capacity of 220,000 barrels.

12 June: Saudi Aramco has told at least five customers in North Asia they will receive full nominated volumes of crude oil in July, after it pledged to cut production next month. Saudi Arabia, the world’s top oil exporter, vowed to reduce its production to 9 million barrels per day (bpd) in July from around 10 million bpd currently. Some Chinese state-owned refiners have requested lower supply in July, according to three trading sources, estimating the combined volume could be about 10 million barrels less than they took for June. Saudi Aramco unexpectedly raised its official selling prices for all crude grades to Asia for July-loading cargoes, which would hurt refining profits and could spur refiners to buy more feedstock from the spot market. However, China’s total July intake of Saudi crude is likely to stay around the same level as June, as other Chinese refiners have asked for more supply for July from a low base in June.

11 June: Pakistan’s Prime Minister (PM) Shehbaz Sharif said the first cargo of discounted Russian crude oil arranged under a new deal struck between Islamabad and Moscow had arrived in Karachi. The discounted crude offers a relief to Pakistan, which is facing a payments crisis and is at risk of defaulting on its debt. Pakistan’s purchase gives Russia a new outlet, adding to Moscow’s growing sales to India and China, as it redirects oil from western markets because of the Ukraine conflict. Energy imports make up the majority of Pakistan’s external payments. The country’s imports of crude are expected to reach 100,000 barrels per day after the first cargo arrives.

9 June: In an effort to speed up work on Turkmenistan, Afghanistan, Pakistan, and India (TAPI) gas pipeline project and finish the feasibility study as soon as possible, Pakistan and Turkmenistan signed a Joint Implementation Plan (JIP). In the meeting with the Turkmenistan delegation, Pakistan Prime Minister Shehbaz Sharif said that being a critical component of his government’s vision, the TAPI gas pipeline project would ensure energy security, economic growth and prosperity in Pakistan as well as the entire region. The PM renewed the commitment to early implementation of the project and hoped that the TAPI gas pipeline would be completed at the earliest by optimising all available resources by all relevant parties. The government of Pakistan invited Turkmenistan to explore gas connectivity from the Chaman border to Gwadar and building LNG (liquefied natural gas) terminals at Gwadar, which would expand supplies to Europe and global LNG markets. The TAPI gas pipeline project aims to bring natural gas from the Galkynysh gas field in Turkmenistan to Pakistan through Afghanistan. The pipeline will transport up to 33 billion cubic metres (bcm) (average 3.2 billion cubic feet per day) of natural gas per year over a 30-year period. The supply source is the Galkynysh gas field in the eastern region of Turkmenistan whereas Pakistan’s off-take will be 1.3 billion cubic feet per day with a pipeline diameter of 56 inches. Pakistan continues to attach great importance to the TAPI gas pipeline project to meet emerging energy challenges for the country and as a manifestation of meaningful commercial, energy cooperation between Pakistan and Central Asia.

12 June: At first sight, the latest Teck Resources chess move by Glencore is slightly confusing. Back in April the US$22 billion Canadian miner rejected the US$68 billion Swiss commodity giant’s merger offer, which planned to split the resulting entity into a separately listed coal company and a standalone metals company. While that approach still stands, Glencore said it has submitted a cash offer to buy only Teck’s coal unit. Teck’s coal arm is expected to make US$2.9 billion of EBITDA in 2024, according to analysts’ estimate polled by Refinitiv, which on the 3 times multiple at which its steelmaking coal peers trade implies an US$8.5 billion valuation. Yet Glencore is already offering cash for the coal arm in its punt for the whole company.

8 June: Ukraine called on Europe to double electricity supplies after Russian attacks on its energy infrastructure and the destruction of the Kahkovka dam which supplies water needed to cool a nuclear power plant. Ukraine’s Energy Minister German Galushchenko said the Zaporizhzhia nuclear plant, Europe’s largest, which uses water supplied from the dam to cool its reactors, does not pose an immediate threat at this point but needs to be monitored. The operator of the dam said that the water level had fallen below the level needed to feed the power plant with water.

7 June: Electric Vehicles (EVs) and other technology to cut emissions is likely to drive a surge in French power demand by 2035, meaning France will need to maintain its existing nuclear capacity, grid operator RTE said. The European Union in March approved a law to end sales of new C02-emitting cars in 2035. To meet that goal, electricity is needed both to power the EVs and the battery plants automakers need to produce them. Production of synthetic aviation fuel also relies heavily on power. As a result, electricity use is likely to rise by nearly 10 terawatt-hours (TWh) per year on average over the next decade to between 580 and 640 TWh in 2035, the RTE climate and energy report said.

13 June: Germany has overtaken China to become the second most attractive country in the world for renewables investment due to its efforts to speed up power market reform and move away from fossil fuels, research showed. Germany was Europe’s biggest buyer of Russian gas until the war in Ukraine and has also been reliant on nuclear and coal. However, it closed its last three nuclear power stations in April. Germany is aiming to have renewables make up 80 percent of its energy mix by 2030. Currently, renewables account for 46 percent, up from 41 percent at the start of 2022, the report said.

12 June: Italy needs to add 190 gigawatt (GW) of renewable energy capacity by 2035 if it wants to meet a G7 pledge to reach a close to net-zero power system in the next decade, climate change think-tank ECCO and consultancy firm Artelys said. The study presented in Rome underlines the challenge the country faces to overhaul its energy sector to cut carbon emissions. The Italian power system is still heavily dependent on fossil resources, as more than 50 percent of electricity in the country is generated by burning natural gas, oil or coal. ECCO and Artelys calculated that by 2035, Italy will have to get to a total of around 250 GW of renewable capacity to achieve an overwhelmingly decarbonised electricity sector. Current installation rates amount to 1.7 GW per year for solar photovoltaic capacity and 0.4 GW per year for wind capacity.

12 June: China’s non-fossil fuel energy sources now exceed 50 percent of its total installed electricity generation capacity. Non-fossil fuel power sources, such as wind and solar power, account for 50.9 percent of the country’s total installed capacity, marking the early completion of a government target proposed in 2021, under which renewable capacity was planned to exceed fossil fuel capacity by 2025. By the end of 2022, China’s installed power generation capacity was 2,564.05 GW, according to data from the National Bureau of Statistics (NBS). China has devoted significant resources to the construction of renewable energy capacity in recent years, building large wind, solar and hydro plants in the west of the country as it seeks to meet a target of peak carbon emissions before 2030. However, inconsistent utilisation of the resources means that China’s energy consumption mix remains weighted toward fossil fuels, principally coal. Coal accounted for 56.2 percent of total energy consumption last year, versus 25.9 percent from renewables which includes nuclear energy, the NBS data showed.

8 June: United States (US) solar energy installations soared 47 percent in the first quarter (Q1), according to an industry report, as easing panel supplies alleviated industry gridlock and allowed many stalled big projects to be completed and connected to the grid. The solar industry had its best first quarter ever, installing 6.1 gigawatt (GW), an analysis by research firm Wood Mackenzie and the Solar Energy Industries Association (SEIA) trade group found. As a result of the strong quarter, SEIA raised its forecast for the year slightly to 29 GW from 28.4 GW. The report said 12 GW of solar modules were imported in the first quarter compared with 29 GW in all of 2022. Residential solar also had a banner quarter, soaring 30 percent to 1.6 GW. Homeowners in California, the sector’s biggest market, scrambled to get systems installed before the state implemented a new policy in April that slashed a subsidy for panel owners. The industry, however, is seeing a slowdown in many states due to economic uncertainty, SEIA said, and residential solar installations are only expected to rise 8 percent this year. In the report, SEIA said it expects strong growth for the industry over the next five years, thanks in large part to renewable energy incentives in US President Joe Biden’s new Inflation Reduction Act. Growth rates are expected to be in the low teens between 2024 and 2028, with installations tripling from their current level by 2029.

8 June: The Energy Information Administration (EIA) expects the largest increases in the United States (US) electricity generation this summer to come from renewable energy sources and natural gas, contributing to a 15 percent reduction in coal-powered output from the previous year. Wind-powered generation will be 7 percent higher than last summer. Solar, for which most of the new installed capacity was concentrated in Texas and California in recent months, will see a 24 percent jump. Battery storage capacity, which helps to provide power when solar and wind resources are low, surged nearly 90 percent in the last 12 months, the EIA said.

7 June: Britain’s advertising watchdog banned some advertising by energy giant Shell on posters, television and on YouTube, saying it gave a misleading impression of the size of the group’s lower carbon business. The ruling adds pressure on globally active energy companies with substantial fossil fuel businesses that also want to advertise their renewable power and lower-carbon products. Around two thirds of Shell’s global US$25 billion budget last year went towards oil and gas, while the company invested US$4.3 billion in renewables, biofuels, hydrogen and electric vehicle charging. Shell UK has said it aimed to invest up to 25 billion pounds (US$31 billion) in the British energy system over the next decade, of which more than 75 percent is intended for low and zero-carbon technology.

This is a weekly publication of the Observer Research Foundation (ORF). It covers current national and international information on energy categorised systematically to add value. The year 2023 is the twentieth continuous year of publication of the newsletter. The newsletter is registered with the Registrar of News Paper for India under No. DELENG / 2004 / 13485.

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