CLP set to buy Suzlon's Rs 800 crore Telengana project for India solar debut

Hong Kong’s CLP Group, the largest overseas investor in power in India, wants a piece of the country’s solar energy action. CLP (formerly China Light & Power), is finalising its solar debut through an acquisition. It’s local arm is in advanced negotiations to buy stakes in a 100 MW solar park project in Telengana from Suzlon Energy, according to people in the know.  The diversification of CLP India’s clean energy portfolio comes after the company established itself as the leading wind power generator in the country with almost a gigawatt of operating assets.  If the deal goes through–a formal announcement is expected in a few days barring hiccups–it will give a big boost to the domestic solar power industry, underscoring global interest even in secondary market brownfield or even greenfield growth opportunities. An estimated 10,000 MW of solar and wind projects are believed to be on the block, seeking equity investments to the tune of Rs 20,000 crore, according to sector experts.  India’s solar energy sector has seen record capacity additions while tariff bids for new projects have fallen to unprecedented lows as the government is pushing hard to achieve the ambitious target of 100,000 MW of grid-connected solar power by 2022. To comply with power purchase agreement (PPA) norms, CLP India will first acquire 49% of the project and, a year after its commissioning, take majority control and may even buy Suzlon out entirely, said the people cited above. Suzlon will however remain involved with the engineering, procurement and construction (EPC) work. The Rs 800 crore project needs Rs 150 crore of equity and the rest will be financed through debt. The country’s second-largest wind turbine manufacturer, Suzlon made its entry into solar in January by winning the rights to set up 210 MW of solar plants in Telangana in this financial year across six projects. The largest is the 100 MW one that Suzlon is planning to monetise first, the others being one of 50 MW and four of 15 MW each. The 100 MW project is due for commissioning on May 31, 2017.Suzlon declined to comment, saying it was in a ‘silent period’ ahead of results on May 30. CLP India said it wouldn’t comment on specific transactions but a spokesperson said the company is looking to increase the proportion of clean energy and non-carbon technologies in its portfolio as part of a global strategy and aims to add 250-300 MW of renewable energy in India every year. The company will continue to expand its wind energy portfolio, currently at a committed capacity of over 1,050 MW, he said.  “Solar power has experienced great thrust from the Indian government and the favourable policies make the sector attractive and create a conducive environment for us,” saidMahesh Makhija, director, commercial, renewables, CLP India. “Our strategy is to build a balanced a portfolio by adding solar power to complement our wind capacities.” He elaborated on the company’s growth strategy for India. “We are focused on accessing various avenues in the market including bidding for projects, joint ventures, industrial markets and pre-bid agreements,” he said. “However, I cannot comment on specifics at this stage and as a policy we do not comment on speculation.” CLP entered the Indian power sector in 2002 with the acquisition of a 655 MW gas-fired power plant in Gujarat and is among the few foreign players that have a presence in conventional energy in the country. It hasn’t participated in the highly competitive bidding that has seen solar tariffs fall to as low as Rs 4.34/KW-hr but expects to join in as rates are seen to be stabilising above Rs 5 per unit following recent auctions in Jharkhand , Karnataka or Rajasthan . Struggling to repay Rs 9,500 crore of loans, Suzlon was given a two-year moratorium on principal and interest payments and additional working capital as part of a debt recast in 2013. The company is using its engineering and project execution skills to duplicate its wind energy business model, where it developed projects and took over all execution risks and then sold stakes to investors. “Several EPC players including Suzlon Mahindra Susten, Sterling & Wilson are getting into development with the purpose of bringing on board a generation partner who can develop the project,” said a person with knowledge of the matter. “That way both can focus on their core and leverage on each other’s strengths. This will be among the first of its kind JV experiment and if successful, will offer a future template for others.

Source: ET Bureau

TPDDL not to collect green compensation

The Supreme Court on Monday exempted Tata Power Delhi Distribution from collecting 'Environmental Compensation’ on monthly basis...

The Supreme Court on Monday exempted Tata Power Delhi Distribution from collecting ‘Environmental Compensation’ on monthly basis from all households in Delhi, including unauthorised colonies, as directed by the National Green Tribunal.

The amount on account of ‘Environmental Compensation’ was to be added to electricity bills, water bill and the property tax demand and the amount so collected was to be transferred to the Delhi government.

A bench headed by Chief Justice T S Thakur gave exemption to Tata Power after its senior counsel Kapil Sibal sought the direction in this regard.

Challenging the NGT’s orders of January 13 and May 8, the discom said the tribunal had impinged upon the principle of separation of powers by levying a tax on the residents NCT of Delhi and erroneously entered into the realm of judicial legislation.

It further argued that the tribunal “has attempted to modify its licence conditions. Such a direction has resulted in altering the licence conditions, which in effect amounts to legislate, since the licence conditions are statutory in nature having been specified by DERC by way of regulations…”

Stating that it was not authorised to collect and effectuate recovery of ‘Environmental Compensation,’  Tata Power said the billing system used by it “is not equipped to incorporate any other charges beyond what has been approved by DERC” and if it is to levy such compensation, “an overhaul of the entire billing system, subject to the approval of DERC, will need to be carried out.”

According to the discom, since it is not a state instrumentality as defined under Article 12 of the Constitution it could not have been directed to recover ‘Environmental Compensation. “A distribution licensee is not allowed to recover anything beyond the tariff as determined by DERC, apart from incidental taxes as prescribed by statute,” it added.

Further, in order to categorise the colonies, Tata Power will have to undertake a 100% consumer survey in its licensed area as currently the billing format does not provide for categorisation of colonies, the application stated, adding that the discom would also incur huge costs in conducting the surveys, employing persons to collect the ‘Environmental Compensation’ as well as other process related to recovery.

Source

AD, Accelerated Depreciation for Solar projects. Who can claim AD? Advantages of AD !!

Accelerated Depreciation

Accelerated depreciation is a term used to depreciate the assets in a manner that greater deductions are allowed in the first few years specially for solar projects. Where as there is no such term in the glossary, appendix or the contents. Normal depreciation is 20% on plant or machinery for any business. But in case of  solar power generation plants government of India has allowed to claim 80% depreciation in first year of the commissioning of the solar power plant generation. 

Accelerated depreciation can reduce costs during a company’s start up year. By increasing the deductions taken during the first few years of business, you will reduce your company’s overall tax debt.

Depreciation is one aspect of the tax, that facilitates greater investment in renewable energy and ultimately lower costs for consumers.

 In India, Accelerated depreciation (AD) allows investors, mostly setting up capacity for captive use, to take advantage of up to 80% of the project cost.

For Example: how AD works in a 1MW solar power generation:

• Project cost (capital cost) to be 800 crores.
• The depreciation amount to be 90% (10 % scrap value assuming)
• Book depreciation (on fixed assets) to be 5.28 % (Dep. As per companies act).
• Tax depreciation rate to be 80% (under Ad benefits)
• Effective tax rate (as per government) to be 33.99

We will take only 5 years to show AD, where as the total life of a solar power plant is taken as 25 years. (though it continues for the entire life cycle of the project). The book depreciation under the straight line method (as per companies act ) would be the same for every year. The date of commissioning of project is very important and should be taken care while calculation. In this case, it is September month. so the tax depreciation would be applicable for 6 months in the first financial year April-March. It is very evident that initially the AD would be very high with, which helps to claim the 80% depreciation in the first few years itself.

In the II table, we can see the net benefit getting from AD when we compare it with book depreciation calculated under the straight line method.

This will have a direct impact on the profits as net income will come down if depreciation expense is increasing resulting in less tax burden.

To find out how much the leveled benefit one can avail (considering the average and fixed tariff adjusted for inflation) in per unit we calculate the discounting factor. In this case the per unit tariff is 2.22.

Calculation of AD under solar :

Years	Unit	1	2	3	4	5
Book Depreciation		2.64%	5.28%	5.28%	5.28%	5.28%
Book Depreciation (Capital cost*Book depreciation)	Rs Lakh	21.12	42.24	42.24	42.24	42.24

Opening	%	100%	60%	12%	2%
Allowed during the year	%	40%	48.00%	9.60%	1.92%
Closing	%	60%	12%	2.40%	0.48%
Accelerated Depreciation	Rs Lakh	320.00	384.00	76.80	15.36
Net Depreciation Benefit	Rs Lakh	298.88	341.76	34.56	-26.88
Tax Benefit	Rs Lakh	101.59	116.16	11.75	-9.14

Table source: FGE

What is Accelerated Depreciation in solar power generation and how can I benefit from it?  - See more at: http://www.eai.in/club/users/aathmika/blogs/25442#sthash.NDp7z6Z8.dpuf

What is Accelerated Depreciation in solar power generation and how can I benefit from it?  - See more at: http://www.eai.in/club/users/aathmika/blogs/25442#sthash.NDp7z6Z8.dpuf

What is Accelerated Depreciation in solar power generation and how can I benefit from it? 
There is nothing called Accelerated Depreciation in solar power generation or for that matter in any other field.
At least the IT Act and the Ready Reckoner does not talk about it. There is no such term in the glossary, appendix or the contents.
Depreciation is 20 % on plant and machinery for any business.
In the case of solar power generation, in order to incentivize the entrepreneurs to enter into the solar power generation market, the Government of India has allowed claiming 80% depreciation in year one of the commissioning of the solar power generation plant.
Example: Let us assume that the total project cost is Rs7crores.
- See more at: http://www.eai.in/club/users/aathmika/blogs/25442#sthash.NDp7z6Z8.dpuf

What is Accelerated Depreciation in solar power generation and how can I benefit from it? 
There is nothing called Accelerated Depreciation in solar power generation or for that matter in any other field.
At least the IT Act and the Ready Reckoner does not talk about it. There is no such term in the glossary, appendix or the contents.
Depreciation is 20 % on plant and machinery for any business.
In the case of solar power generation, in order to incentivize the entrepreneurs to enter into the solar power generation market, the Government of India has allowed claiming 80% depreciation in year one of the commissioning of the solar power generation plant.
Example: Let us assume that the total project cost is Rs7crores.
- See more at: http://www.eai.in/club/users/aathmika/blogs/25442#sthash.NDp7z6Z8.dpuf

What is Accelerated Depreciation in solar power generation and how can I benefit from it? 
There is nothing called Accelerated Depreciation in solar power generation or for that matter in any other field.
At least the IT Act and the Ready Reckoner does not talk about it. There is no such term in the glossary, appendix or the contents.
Depreciation is 20 % on plant and machinery for any business.
In the case of solar power generation, in order to incentivize the entrepreneurs to enter into the solar power generation market, the Government of India has allowed claiming 80% depreciation in year one of the commissioning of the solar power generation plant.
Example: Let us assume that the total project cost is Rs7crores.
- See more at: http://www.eai.in/club/users/aathmika/blogs/25442#sthash.NDp7z6Z8.dpuf

What is Accelerated Depreciation in solar power generation and how can I benefit from it? 
There is nothing called Accelerated Depreciation in solar power generation or for that matter in any other field.
At least the IT Act and the Ready Reckoner does not talk about it. There is no such term in the glossary, appendix or the contents.
Depreciation is 20 % on plant and machinery for any business.
In the case of solar power generation, in order to incentivize the entrepreneurs to enter into the solar power generation market, the Government of India has allowed claiming 80% depreciation in year one of the commissioning of the solar power generation plant.
Example: Let us assume that the total project cost is Rs7crores.
- See more at: http://www.eai.in/club/users/aathmika/blogs/25442#sthash.NDp7z6Z8.dpuf

ACCELERATED DEPRECIATION

ACCELERATED DEPRECIATION

ACCELERATED DEPRECIATION

ACCELERATED DEPRECIATION

Renewable Energy Mix, Indian Grid

Electricity can be produced directly from biomass by Solar-induced hybrid fuel cell

A new solar-induced direct biomass-to-electricity hybrid fuel cell can operate on fuels as varied as powdered wood. The fuel cell

relies on a polyoxometalate (POM) catalyst (shown in the vials) which changes color as it reacts with light.

Now, researchers at the Georgia Institute of Technology have developed a new type of low-temperature fuel cell that directly converts biomass to electricity with assistance from a catalyst activated by solar or thermal energy. The hybrid fuel cell can use a wide variety of biomass sources, including starch, cellulose, lignin -- and even switchgrass, powdered wood, algae and waste from poultry processing.
The device could be used in small-scale units to provide electricity for developing nations, as well as for larger facilities to provide power where significant quantities of biomass are available.

The challenge for biomass fuel cells is that the carbon-carbon bonds of the biomass -- a natural polymer -- cannot be easily broken down by conventional catalysts, including expensive precious metals, Deng noted. To overcome that challenge, scientists have developed microbial fuel cells in which microbes or enzymes break down the biomass. But that process has many drawbacks: power output from such cells is limited, microbes or enzymes can only selectively break down certain types of biomass, and the microbial system can be deactivated by many factors.

The system provides major advantages, including combining the photochemical and solar-thermal biomass degradation in a single chemical process, leading to high solar conversion and effective biomass degradation. It also does not use expensive noble metals as anode catalysts because the fuel oxidation reactions are catalyzed by the POM in solution. Finally, because the POM is chemically stable, the hybrid fuel cell can use unpurified polymeric biomass without concern for poisoning noble metal anodes.
The system can use soluble biomass, or organic materials suspended in a liquid. In experiments, the fuel cell operated for as long as 20 hours, indicating that the POM catalyst can be re-used without further treatment.

Source : Science daily

A New Model for Solar Integration: Virtual Power Plants

Today’s global energy market is in the midst of a paradigm shift, from a model dominated by large centralized power plants owned by big utilities to a mixed bag of so-called distributed energy generation facilities — smaller residential, commercial and industrial power generation systems — many of which use renewable resources.

The boom in smaller installations, which are benefiting from new technological developments and business models, is undermining the traditional advantages associated with building large centralized power generation, such as economies of scale. For example, self-consumption, where consumers become producers of their own power (or “prosumers”), has caused major utilities to respond with new business models designed to keep those consumers as customers.

Virtual Power Plants
One distributed generation technology with significant growth potential is the virtual power plant (VPP). In the VPP model an energy aggregator gathers a portfolio of smaller generators and operates them as a unified and flexible resource on the energy market or sells their power as system reserve.
VPPs are designed to maximize asset owners’ profits while also balancing the grid. They can match load fluctuations through forecasting, advance metering and computerized control, and can perform real-time optimization of energy resources.
“Virtual power plants essentially represent an ‘Internet of Energy,’ tapping existing grid networks to tailor electricity supply and demand services for a customer,” The VPP market will grow from less than US $1 billion per year in 2013 to $3.6 billion per year by 2020, according to Navigant’s research — and one reason is that with more variable renewables on the grid flexibility and demand response are becoming more crucial.
VPPs can deliver needed energy at peak usage times, and can store any surplus power, giving the energy aggregator more options than would exist in a single power plant. Other advantages include improved power network efficiency and security, cost and risk savings in transmission systems, increased value from existing infrastructure assets and reduced emissions from peaking power plants. And, importantly, VPPs can also enable more efficient integration of renewable energy sources into the grid by balancing their variability.
if one solar power source generates a bit more energy than predicted and another generates a bit less, they will compensate for each other, resulting in a more accurate forecast and making it easier to sell the capacity in the market or to use it in power systems operation. A VPP can also combine variable renewable power sources with stable, controllable sources such as biomass plants, using the flexibility of the biomass source to smooth out any discrepancy between planned and actual production.
How a VPP Works

 

A Virtual Power Plant aggregates different types of energy generation and controls it as if it was one source. Credit Siemens
source: RE world

Diagram of Solar roof top net metering system