MonitorsPublished on Jun 21, 2022
Energy News Monitor | Volume XVIII, Issue 49
Quick Notes

Growth in Peak Electricity Demand in India: Time for Demand Management

Background

Electricity consumption by the industrial, domestic, and agriculture sectors accounted for about 89 percent of total electricity consumption in India in 2019-20. The share of industrial electricity consumption has not changed since 2001-02 at about 43 percent of total electricity consumption, but the share of domestic consumption has increased from 21 percent in 2001-02 to 25 percent in 2019-20 and the share of agricultural consumption has fallen from 26 percent to 17 percent in the same period. In the last two decades, domestic electricity consumption has grown at a CAGR (compound annual growth rate) of about 7.7 percent that was faster than industrial consumption that grew at 6.6 percent and agricultural consumption that grew by 4.9 percent in the same period.

The long running rural electrification programme that increased household access to electricity, increase in generation capacity that improved the quality of electricity supply in rural areas, and increase in household incomes that has increased penetration of household electrical appliances are contributing to growth in domestic demand.  Work-from-home and hybrid work cultures have not only contributed to increase in domestic electricity demand in the last two years, but introduced new peak load periods in the afternoon. To forecast electricity demand in the future and facilitate load shifting, in-depth grasp of a range of social practices, material arrangements, and how they are temporally and spatially ordered in different categories of Indian households will be necessary. This is likely to be difficult.

Forecasting Domestic Electricity Demand

An excellent illustration of the difficulty in forecasting household electricity demand played out on 5 April 2020 (Sunday), during the pandemic when households were asked to switch off lights for nine minutes.  Based on a detailed analysis of electricity demand the previous Sunday and estimations of lighting load in urban and rural households, the national load dispatch centre along with state load dispatch centres projected that loss of demand would be in the range of 12-14 GW.  The recorded all-India demand loss during the nine minutes was over 31 GW, more than double the demand loss anticipated.  The ongoing crisis of coal stock shortages and power outages are also partly because of the failure to anticipate the increase in the use of air-conditioners by households when a hot summer along with the shift of work to the home unexpectedly increased electricity demand.

Since the end of pandemic-related lockdowns, demand for electricity has exceeded electricity demand in the pre-pandemic months.  Compared to the pre-pandemic month of March 2019, demand for electrical energy in March 2022 has increased by over 15 percent and peak demand has increased by over 18 percent.  Longer-term trends punctuated by the pandemic also signal a shift in the pattern of electricity consumption.  In the last five years, peak demand has increased by 40 GW (gigawatts) at a CAGR of 5 percent.  In the same period, the average yearly difference between peak and minimum electricity demand has increased by 7 GW at a CAGR of 9 percent.  The difference between peak and minimum demand as a percent of peak demand has also increased underlining heightened demand volatility. This means that the Indian grid needs to maintain peak generation capacity that is flexible and dispatchable.  This will increase overall costs of the power system.  One of the ways in which these costs can be reduced is to shave or shift peak load through demand management systems.

Managing Household Electricity Demand

Load shedding or forced outages is one of the ways in which the Indian power system has reduced peak domestic demand. This not only imposes economic costs on the country, but also compromises consumer welfare.

To manage forced power outages, middle class, and affluent households in India have invested in battery-based backup systems. Studies have found that aggregation of battery storage at the community or street level can reduce per-house battery requirements by 50 percent for load smoothing and 90 percent for peak shaving. India’s first grid connected community energy storage system was installed in Rani Bagh, New Delhi in 2021. Dense population with vertical load growth and space constraints to put additional transformers were amongst the reasons for adopting community level battery storage.  It may not be possible to replicate this response across the country partly because of the cost and partly because that have widely different load profiles.  Battery storage used at the household or community level impose energy and economic costs. These systems waste electricity in the process of inversion, storage, and rectification. These losses add to the electricity cost for the consumer and increase stress on the grid.

The alternative is to understand residential electricity demand patterns to manage load shifting. Whilst this is common practice in the non-residential sector (industrial and agriculture), residential demand management systems are underdeveloped because information about household load profiles and shiftable loads is inadequate. Demand management systems for households normally require a detailed understanding of shiftable potential of participating loads to accurately forecast when load shifting may take place. Interventions that are designed to shift or shed peak load in residential electricity demand will need to address how time dependent practices are.

Electricity used for lighting or cooling in households is neither “shiftable” load nor “sheddable”.  In Delhi, more than 50 percent of the annual load is temperature dependent. This share is among the highest for cities around the world, including cities in tropical regions. Consumers may not be willing to shut down temperature related demand for electricity even with incentives. In affluent Indian households, possible “shiftable” loads are washing machines and kitchen appliances; “sheddable” loads are the stand-by loads. It is likely that these “shiftable” and “sheddable” loads are currently not large enough in India to make a difference to peak demand. In the future electric vehicle (EV) charging is likely to offer huge potential for load shifting and a large pool of energy storage. EV charging during off-peak hours will essentially flatten the demand curve and substantially increase the utilisation efficiency of generating assets.

In advanced electricity markets, price based, and incentive-based demand response programmes help to reduce peak electricity demand.  Price based response includes time of use (TOU) tariff, real time pricing (RTP), and critical peak pricing (CPP) that enable electricity consumers to shift load to non-peak periods when tariff is low and save on energy expenses. Incentive based programmes pay participating consumers to reduce load because of a grid reliability problem or because of high electricity prices.

In India, the average electricity cost is the basis of electricity tariff.  Tariffs, thus, bear little relation to true production costs of electricity as they vary over time. To enable credible demand response, tariff should motivate consumers to change consumption patterns in response to changes in the price of electricity over time. Installation of smart meters across the country will allow users to monitor their consumption by measuring energy usage in real time and send this information on an hourly basis to the distribution company. TOU pricing allows for lower prices when demand is low and higher when demand peaks.

Experience of advanced electricity markets on TOU pricing is mixed.  For example, in the USA only 4 percent of consumers have signed up for TOU pricing though 80 percent are on smart meters. In the EU and the UK, the share of household consumers on TOU pricing is between 15-20 percent. Higher share of renewable energy in the grid may require TOU tariff to become the norm rather than remain the exception.

In the future load shifting may comprise of load controllers which will automatically manage electricity consumption from different devices and appliances in the household. The controllers will prioritise loads and appliance use depending on system and users’ requirements. The algorithms underpinning automated load controllers will necessitate information about the practices of clusters of end-users. Findings on time dependence of practices could potentially inform automated demand controllers’ algorithms. Demand reduction during peak periods will enable distribution companies to optimise their generation assets, thus saving costs. Reduction in the need for increase in generation resources will reduce carbon emissions.

Source: Central Electricity Authority

Monthly News Commentary: Natural Gas

High Prices Reduce Consumption of Natural Gas

India

Production

Revenues from natural gas production by companies like Cairn India, Focus Energy, and Oil India Ltd has increased nearly four-fold in 2021-22 in the Rajasthan state compared to 2018-19. In 2018-19, the state produced 708 million cubic metres (mcm) of natural gas for a revenue of INR1 bn (US$12.89 mn). In 2021-22, natural gas production hit a record 1,570 mcm , fetching the state government INR3.84 bn (US$49.49 mn) in revenues. Most of the gas has been produced from Barmer and Jaisalmer regions, while the maximum quantity has come from Cairn India’s Rageshwari field in Barmer at about 1,320 mcm­. The gas from Cairn is supplied to Gas National Grid and to various consumers. The gas produced by Focus and Oil India is supplied to Ramgarh power plant. Gas production from ONGC’s Manoharpur Tibba has stopped for the past two years. The company is setting up a dehydration unit to revive production.

Demand

Fitch Ratings cut its India gas consumption outlook for the current fiscal to a growth of 5 percent as the recent spike in domestic gas prices and high LNG rates would slow the shift to the environment-friendly fuel. The government more than doubled the price of gas from domestic fields to US$6.1 per million metric British thermal units (mmBtu) for the six-month period beginning 1 April. Domestic gas production meets roughly half of the current consumption, while the remaining is imported in the form of liquefied natural gas (LNG). Fitch said state gas utility GAIL (India) Ltd’s earnings from its natural gas marketing segment are likely to increase due to the recent rise in spot LNG prices to levels much higher than the long-term contracted LNG from US (United States). GAIL generally hedges most of its volume and price risk on near-term deliveries of the US LNG to reduce volatility and generate positive return. Its supply of LNG from the US is linked to Henry Hub (HH) prices, which are lower than current spot LNG rates, which are trading above US$30 per mmBtu. Fitch recently revised its title transfer facility (TTF) gas price assumptions to US$20 per mmBtu for 2022 and US$10 in 2023, reflecting the impact of geopolitical risks on demand and supply of hydrocarbons.

LNG

Global energy giant Shell will foray into retailing LNG for long-haul transportation like trucks, with its first filling station coming up in Gujarat this year as it bets big on the Indian gas market. Shell operates a 5 million tonnes (MT) a year LNG import facility at Hazira in Gujarat and has a small network of petrol pumps. It is now looking at the LNG for trucks/buses market as a growth avenue. While the first site is likely to be an exclusive LNG retail outlet, the company may in the future look to co-locate the LNG refuelling facility within petrol pumps. The government is pushing the use of LNG as fuel for long-haul transportation. It is targeting 50 stations in Gujarat, Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, and Rajasthan in next three years and ultimately 1,000 outlets. LNG, which is natural gas super-cooled to liquid form, has much less carbon footprint than diesel. Besides environmental benefits, it is also cheaper on long-haul routes.

CGD/CNG

Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) have bagged two licenses each for retailing CNG (compressed natural gas) to automobiles and piped cooking gas to households in the latest bid round, regulator PNGRB (Petroleum and Natural Gas Regulatory Board) said. Seven companies had put in 21 bids for city gas licences in five areas in states like Uttar Pradesh and West Bengal. The PNGRB had offered 5 Geographical Areas (GAs), spread over 27 districts in five states, and in the 11A city gas distribution (CGD) bid round. BPCL won the license for a GA comprising districts such as Lakhimpur Kheri, Sitapur, and Mahrajganj in Uttar Pradesh and another for Chhattisgarh’s Koriya, Surajpur, Balrampur, and Surguja districts have been clubbed into one GA, PNGRB said. HPCL won the license for a GA made up of Banka in Bihar as well as Dumka, Godda, Jamtara, and Pakur districts in Jharkhand. It also won the license for GA made up of Birbhum, Murshidabad, Malda, and Dakshin Dinajpur districts of West Bengal. GAIL Gas Ltd, a unit of state gas utility GAIL (India) Limited, won the license for the Kodagan, Bastar, Sukma, Bijapur, and Dantewada districts in Chhattisgarh. Bids for the 5 GAs were received on 6 April, it said. The sixth GA of Yanam in Puducherry has been added to the bid round and bids for this area are due on 10 May. After this bid round, about 88 percent of the country’s area would be authorised for the development of CGD network to provide access to natural gas to approximately 98 percent of the population, the PNGRB said.

Indraprastha Gas Limited (IGL) has increased the price of domestic PNG by INR4.25 per standard cubic meter (SCM) effectively to partially cover the hike in input gas cost. According to IGL, PNG will cost INR45.86 per unit in Delhi and INR45.96 per unit in Noida, Greater Noida and Ghaziabad. While people in Gurugram will have to pay INR44.06 per SCM. Earlier on 1 April, IGL increased the CNG price by 80 paise per kg and PNG price by INR5.85 per cubic meter (16.5 percent).

Gas Trade

Vedanta plans to auction 0.10 million metric standard cubic meters a day (mmscmd) of natural gas on 12 May. The supplies will start no later than 1 June and end on 31 May 2023. Vedanta has the pricing and marketing freedom for the gas it produces from the Barmer field. The floor rate has been fixed as one dollar above the domestic formula price that the government publishes every April and October. The current formula price is US$6.1 per mmBtu. The sale price is to be calculated as the lower of Platts West India Marker plus one dollar or 16.67 percent of the average Brent price plus a premium that bidders would quote. Platts West India Marker is the LNG price assessment for spot physical cargoes of delivered ex-ship into ports in India and the Middle East region. Vedanta has developed Raageshwari Gas Terminal to process and evacuate natural gas produced from its Barmer field. The terminal is connected by the Barmer-Pali pipeline of GSPL India Gasnet Limited to GSPL’s high-pressure Gujarat grid, which is further well connected to the national gas grid, as per the auction document.

Reliance Industries Ltd (RIL) will shortly call bids for 12 mmscmd of gas from its MJ field in the eastern offshore Krishna Godavari D6 block. The MJ field is the third and the last set of discoveries that RIL is developing in the KGD6 block. MJ-1 is estimated to hold a minimum of 0.988 trillion cubic feet (Tcf) of contingent resources. The MJ field also has oil deposits that will be produced using the floating production storage and offloading (FPSO) system.

Rest of the World

Europe

The European Union (EU) countries will debate a possible deal to share out the costs of buying gas to fill storage and build a supply buffer ahead of next winter, according to a draft document. EU countries are negotiating proposed rules that would require them to fill their gas storage to at least 90 percent of capacity by 1 November each year from 2023 and 80 percent this year – an attempt to reduce the leverage of Russia, which supplies around 40 percent of EU gas. The proposal had worried some states with gas storage, including Hungary, Austria, and the Netherlands, which feared their companies would be forced to buy large volumes of gas at near-record prices, while those in countries with little or no storage would not.

Italy’s Eni has signed a deal to increase gas supplies from the Congo Republic by more than 4.5 billion cubic meters (bcm) a year. The deal is the latest Italian move to reduce dependence on Russian gas, with Foreign Minister Luigi Di Maio and Ecology Transition Minister Roberto Cingolani leading an Italian delegation to Angola and the Congo Republic this week to line up LNG contracts. The new partnership with the Congo Republic has “great growth potential” in the short and medium term, Di Maio said. Italy obtains 40 percent of its gas imports from Russia and has made the diversification of its energy sources a priority since Russia’s invasion of Ukraine triggered Western sanctions that have raised the threat of disruption to supplies. Under the Congo agreement, development of a LNG project involving Eni will be stepped up so that production can begin in 2023. It will have capacity of 4.5 bcm when fully operational, Eni said. Italy signed a separate deal for between 1 bcm and 1.5 bcm of gas a year from Angola. Italy has also signed similar deals with Algeria and Egypt in an effort to replace the 29 bcm of gas it receives from Russia’s Gazprom every year. Ecology Transition Minister Cingolani said that the government aims to reach independence from Russian gas imports by the second half of 2023.

Greece could be sitting on tentative recoverable gas reserves of more than 600 bcm, a senior executive of its hydrocarbons commission said, as Athens accelerates gas exploration to cut its reliance on Russian energy. Greece covers nearly 40 percent of its annual energy consumption of about six billion cubic metres with Russian gas. With Russia’s invasion of Ukraine exacerbating a jump in prices and fears over gas supplies, the Greek government pledged to speed up its gas search in six blocks in western Greece and off the southern island of Crete. Collecting seismic data through survey vessels is a key step in gas exploration to identify potential reserves. Greece aims to conclude a first round of all seismic research by March 2023.

A German portal that will collect live data from the country’s biggest gas consumers will go live in October, the country’s network regulator said, marking the latest step in preparations for an eventual halt in supplies from Russia. All major gas consumers in Europe’s largest economy need to register with the platform to give the Bundesnetzagentur – which would be in charge of rationing in case of an emergency – a detailed overview over consumption. The regulator said an initial data collection would take place 2-15 May.

Africa

Algeria is expected to supply Italy with an additional 4 bcm of natural gas per year at the most. Italian Prime Minister Mario Draghi is due in Algiers to discuss with Algerian President Abdelmadjid Tebboune energy and bilateral relations. Algeria has exported 21.2 bcm  of gas to Italy in 2021.

Middle East

Eni has signed a deal to boost gas production in Egypt and boost LNG supplies to Europe, the Italian energy group said. The move comes as Italy and Europe step up efforts to find alternative gas imports to cut their reliance on Russian gas as the war in Ukraine escalates. Italian Prime Minister Mario Draghi clinched a deal to ramp up gas imports from Algeria to help replace some of the 29 bcm Italy receives from Russia. Eni, which in 2015 discovered the super giant Zohr gas field in Egypt, said it had agreed with the Egyptian Natural Gas Holding Company (EGAS) to boost gas production and step up exploration at existing and new fields. Eni said the agreement could result in shipping up to 3 billion cubic meters of LNG to Europe this year. Eni, whose biggest shareholder is the state, holds a stake in Egypt’s Damietta LNG plant which has a capacity of more than 7.5 bcm per year.

North and South America

Argentina’s new deal with Bolivia to up natural gas imports will bring savings of US$769 mn in foreign-exchange reserves and replace 14 vessels ­ increasingly expensive LNG, Energy Secretary Dario Martinez said. Argentine President Alberto Fernandez and his Bolivian counterpart Luis Arce reached a deal for Bolivia to export 14 mmscmd to Argentina, a boost but not as high as hoped. Bolivia will also give priority to Argentina for further supply if it is able to increase its production. Martinez said Argentina agreed to pay Bolivia an average US$12.18 per mmBtu of natural gas, adding that international LNG prices were more than three times that and diesel prices were over twice as high.

USA

The US  natural gas production and demand will both rise in 2022 as the economy grows, the US Energy Information Administration (EIA) said. EIA projected that dry gas production will rise to 97.41 billion cubic feet per day (bcfd) in 2022 and 100.86 bcfd in 2023 from a record 93.57 bcfd in 2021. EIA’s April supply projection for 2022 was bigger than its March forecast of 96.69 bcfd, but its demand projection was smaller than its March forecast of 84.59 bcfd for 2022.

TotalEnergies said it would step up its LNG activities in the United States by expanding production at the Cameron site in Louisiana. The move comes as European countries seek to reduce their dependency on gas flows from Russia by importing more LNG via tankers. TotalEnergies had signed an agreement with its partners for the expansion of Cameron LNG and that under the terms of the deal, it will offtake 16.6 percent of the projected fourth train’s production capacity, and 25 percent of the projected debottlenecked capacity. The firm said that in recent years it has become the leading exporter of US LNG, most of which has been exported to Europe. It added that it aims to further expand its presence in the US to meet the growing need for LNG. The Cameron LNG expansion is subject to obtaining the necessary permits and all partners reaching a final investment decision planned for 2023.

French gas transport network operator GRTgaz has put in place measures that can be invoked to limit gas supply to customers in the event of shortages, and called on shippers to fill underground storage ahead of next winter. So-called load shedding is the deliberate shutdown of consumption to help cover supply deficits, usually determined through contracts with industry in the event of excess demand. The measures allow the company to issue orders to reduce or interrupt gas consumption within two hours to large consumers connected to its network, and ask distribution system operators to do the same in the event of a shortage.

Russia & the Far East

Russia’s Gazprom expects about a 4 percent fall in gas output this year, Deputy Chief Executive Vitaly Markelov said. Markelov said the group expected output to fall to 494.4 bcm from 514.8 bcm last year, without elaborating. This would be Gazprom’s lowest production since 2017 when it stood at 471 bcm. Gazprom halted gas supplies to Poland and Bulgaria in a payments row with Europe, which is trying to wean itself off Russian energy. Russia’s economy ministry expects oil and gas production to fall this year, with gas output declining to 702.4-720.9 bcm from 763.5 bcm in 2021.

Daily nominations for Russian gas deliveries to Slovakia via Ukraine rose, while flows eastbound into Poland from Germany through the Russia-EU Yamal pipeline and direct flows from Russia to Germany via Nord Stream 1 remained stable. Daily nominations for Russian gas deliveries to Slovakia through Ukraine via the Velke Kapusany border point were around 545,006 megawatt hours (MWh) per day, versus 381,789 MWh per day, data from Slovakian operator TSO Eustream showed. Russian gas producer Gazprom said it was supplying natural gas to Europe via Ukraine on Monday in line with European consumers’ requests, which had increased from the previous day. Eastbound gas flows via the Yamal-Europe pipeline from Germany to Poland, were little changed from the previous 24 hours data from the Gascade pipeline operator showed.

Russian gas producer Gazprom is supplying natural gas to Europe via Ukraine in line with requests from European consumers, it said. Requests stood at 79.6 million cubic metres for 10 April, slightly higher than the 78.3 mcm requested a day earlier, Gazprom said.

News Highlights: 4 – 10 May 2022

National: Oil

India’s crude imports rise 4.2 percent to 19.03 MT in March on demand recovery

10 May: India’s crude imports rose about 4.2 percent in March to 19.03 MT from a year earlier, government data showed, as consumption picked up in the world’s third-largest oil importer after COVID-19 curbs were eased. Crude imports for the month were also 8.2 percent higher from February, according to data from the Petroleum Planning and Analysis Cell. India’s fuel demand had scaled a three-year peak in March, with petrol sales hitting an all-time high, as demand rose and the market built up supplies ahead of expected price increases. India has bought more than twice as much oil from Russia since it invaded Ukraine as in the whole of 2021, at a time when Western sanctions have prompted many oil importers to shun trade with Moscow. Imports of oil products rose 9 percent month-on-month, but were down 9.5 percent from 2021 at 3.62 MT. Exports of oil products climbed 10.9 percent from a year earlier and of the total 6.74 MT exported in March, diesel accounted for 3.37 MT. India – Asia’s third-biggest economy – holds surplus refining capacity and is a major exporter of refined fuels.

LPG hike draws jibe from Goa Congress

8 May: The Centre’s move to increase prices of domestic LPG (liquefied petroleum gas) cylinders prompted the state Congress president to take a dig at BJP and its supporters. The party said that the INR50 increase in gas prices is a gift from the Centre to voters who voted for BJP in the recently concluded assembly elections. The price hike comes days after the price of commercial LPG cylinders was increased by INR102.5 earlier this month. The latest price hike of domestic gas cylinders has come at a time when petrol prices are already beyond the INR100 per litre mark and when diesel prices are inching near to the century mark.

India wants Russia to sell its oil at less than US$70 per barrel

4 May: India is trying to convince Russia to offer deeper discounts on crude oil – Delhi is looking to pay less than US$70 per barrel – to offset risks in dealing with the OPEC+ producer in light of increasingly harsh financial sanctions against Moscow over its invasion of Ukraine. Indian refiners – state and private – have bought over 40 million barrels of discounted Russia crude since Vladimir Putin launched his ‘special military op’ against Ukraine 24 February. Russia offers India discount on purchase of 15 million barrels of oil. Total purchases are significant in volume – 20 percent more than Russia-India flows in 2021, according to trade ministry data.

National: Gas

India buyers grab discounted Russia LNG shunned by rest of world

9 May: India’s liquefied natural gas (LNG) importers are purchasing extra volumes from Russia at a discount as most other spot buyers shun the fuel. Companies including Gujarat State Petroleum Corp (GSPC) and GAIL (India) Ltd recently bought several LNG spot shipments from Russia at prices below prevailing market rates, according to traders with knowledge of the matter. They may purchase more as long as the Russian fuel remains cheaper than rival suppliers, the people said, who requested anonymity to discuss private details. India gets almost three-quarters of its LNG under long-term contracts, but sweltering heat and ongoing blackouts are forcing the nation’s utilities to top up with spot shipments, which are trading at well above normal due to a global supply crunch. With demand for gas in the fertilizer sector also rising, some importers are snapping up the discounted Russian shipments. The Russian LNG shipments were purchased by Indian firms via recent spot tenders, as those cargoes were offered at lower prices than other suppliers. Outside of India, few LNG importers allow for suppliers to offer Russia-origin shipments in purchase tenders.

RIL expects gas prices to increase again in October

8 May: Reliance Industries Limited (RIL) expects prices of natural gas in India torise again in October as its gas exploration business reaps the rewards of a global surge in energy prices that have already pushed the rates to a record high. The government sets gas prices every six months based on international rates. The price of gas from old or regulated fields was more than doubled to a record US$6.1 per mmBtu (million metric British thermal units) from 1 April and that for difficult fields like those lying in deepsea to US$9.92. per mmBtu. Rates are due for a revision in October. It is anticipated that the price of gas from old fields of Oil and Natural Gas Corporation (ONGC) will be hiked to about US$9 per mmBtu and the cap for difficult fields will rise to double digits.

National: Coal

NTPC invites bids to import 4.53 MT of coal for blending

10 May: NTPC Ltd has invited bids to procure imported 4.53 million tonnes (MT) coal mainly for blending with the domestic dry fuel in thermal plants. The NTPC tender for the import of coal assumes significance in view of the ongoing dry fuel shortage at power plants. The power ministry had directed all the states and gencos (electricity-generating firms) to import at least 10 percent of their requirement of coal for blending amidst shortages at thermal plants. The tender documents showed that NTPC has floated three separate tenders for procuring 4.53 MT — 1.5 MT, 1.6MT and 1.43 MT — of imported coal on 7 May 2022. The company had invited bids to procure 4.93 MT of imported coal last month. It has been mandated to procure 20 MT of imported coal in 2022-23 for blending with the domestic dry fuel at its thermal plants because of the ongoing shortage.

India raids engineering firms after CIL antitrust complaint

6 May: India’s antitrust body conducted raids at several small mining services companies for allegedly colluding on prices while offering services to the world’s biggest coal miner, Coal India Limited (CIL). Officers of the Competition Commission of India (CCI) raided companies in Kolkata in West Bengal state and Ranchi and Dhanbad in eastern state of Jharkhand. The raids follow complaints from Bharat Coking Coal Limited, a unit of CIL, and were related to price rigging of tenders worth at least INR20 billion (US$260 million). The services rendered by the mining services companies under investigation related to extraction and transportation of coal.

CIL to offer its 20 closed underground mines to private players

6 May: Coal Minister Pralhad Joshi said that with the target to minimise the import of thermal coal, Coal India Limited (CIL) is going to offer its 20 closed/discontinued underground mines to private players on a revenue sharing model. Continuation of mining activities will help in increasing coal supply to thermal power plans while creating employment opportunities for local people, he said. Minister of State for Coal, Mines, and Railways Raosaheb Patil Danve said India has the 5th largest reserve of coal in the world and the government’s aim is to increase domestic coal production to 1.2 billion metric tonnes by FY 23-24.

National: Power

Puducherry government inks deal with NLC for procurement of 100 MW power

9 May: The Puducherry government signed a power procurement agreement with public sector Neyveli Lignite Corporation (NLC) for purchase of 100 MW electricity from the Talabira thermal power project of NLC in Odisha to the Union Territory. The agreement is related to procurement of power from Talabira Thermal Power Plant of NLC India Limited in Odisha. The cost of one unit of electricity from the thermal power plant in Talabira would be INR3.06 per unit. The supply of power in keeping with the agreement would be available from 2025-2026. With the supply from NLC, there would be no shortage of electricity. Already Puducherry was purchasing around 400 MW power from NLC and with the agreement signed would be assured supply for the next 10 years.

Rajasthan to see more power cuts as electricity demand soars

6 May: In view of the high electricity demand than the availability, the Rajasthan government has decided to go in for more power cuts, days after providing a breather by reducing the scheduled daily outage. The State government had reduced the scheduled power cut timing from 1 May but has again decided to cut power across the State as per the schedule announced on 28 April.

CERC caps all market segments on power exchanges at INR12 per unit

6 May: The Central Electricity Regulatory Commission (CERC) capped all the market segments on power exchanges at INR12 per kilowatt hour (kWh), or unit, due to the increasing trend of rising prices on account of supply shortage and sudden increase in demand. The order will be in force till 30 June. CERC had already capped the Real Time Market (RTM) and the Day Ahead Market (DAM) at INR12 per unit from the earlier INR20 on exchanges on 1 April. CERC said that analysing the recent behaviour in volume and prices at the power exchanges, based on the daily trade information published by them reveals that buy bid in DAM registered an increase of about 28 percent in April as compared to March, while that in RTM increased by 144 percent during the same period. However, the cleared volume in DAM registered a decrease of about 30 percent in April compared to March, while that in RTM decreased by 16 percent during the same period.

From 1 October, Delhiites to get electricity subsidy if opted: Delhi CM

5 May: From 1 October, the Delhi government will provide subsidies on electricity to consumers who opt for the scheme, Chief Minister (CM) Arvind Kejriwal said. The Delhi consumers at present get “zero” power bill up to 200 units of electricity and a subsidy of INR800 on consuming 201 to 400 units of power per month. Notably, the Aam Aadmi Party (AAP) government in Punjab too has said it will roll out its scheme of providing free electricity up to 300 units for every household from 1 July.

National: Non-Fossil Fuels/ Climate Change Trends

SJVN bags 90 MW floating solar project worth INR5.85 bn

7 May: SJVN Ltd has bagged a 90 MW floating solar project worth INR5.85 bn at Omkareshwar, in Madhya Pradesh. SJVN has bagged 90 MW Floating Solar Project at the rate of INR3.26/Unit on Build Own and Operate basis in a tender floated by REWA Ultra Mega Solar Ltd (RUMSL), Nand Lal Sharma, Chairman & Managing Director, SJVN said. SJVN will develop this project in the country’s largest floating solar park at Omkareshwar in Khandwa District of Madhya Pradesh. With a total portfolio of 31,000 MW, SJVN has 19 solar power projects of around 3.3 GW capacity under operation and different stages of development.

Tata Power Renewable commissions 120 MW solar project in Gujarat

4 May: Tata Power Renewable Energy Ltd, a 100 percent subsidiary of Tata Power, has commissioned a 120 MW solar project in Masenka, Gujarat, the company said. The project will produce 3,05,247 MWh annually for the Gujarat government (GUVNL). Approximately 3.81 lakhs modules were used in the installation. The project will reduce up to 1.03 lakh tonnes of CO2 (carbon dioxide) annually, the company said. A thin-film glass on glass modules of various wattages and harnesses of capacity 440Wp to 460Wp have been used in the project. With the addition of this 120 MW, the renewables capacity in operation by Tata Power stands at 3,520 MW with 2,588 MW of solar and 932 MW of wind. Its total renewable capacity is 4,920 MW, including 1,400 MW of renewable projects under various stages of implementation.

International: Oil

ConocoPhillips submits US$1.1 bn Norway oil development plan

10 May: ConocoPhillips submitted a plan to develop an oil discovery in the Norwegian North Sea for 10.5 billion Norwegian crowns (US$1.10 billion), the US (United States) petroleum company said. Known as Eldfisk North, the development is part of the wider Ekofisk area, where hydrocarbons have been pumped for more than 50 years, and the operator said the new reserves are expected to come on stream in 2024. The Eldfisk North reservoir contains mostly oil and some gas and is estimated to hold between 50 million and 90 million barrels of oil equivalent, ConocoPhillips said. During the COVID-19 pandemic, Norway introduced tax incentives for fields covered by development plans introduced by the end of 2022, part of Norway’s bid to extend the life of its oil and gas industry for decades. Norway is western Europe’s largest oil and gas producer, pumping around four million barrels of oil equivalent per day, but some of its major fields face depletion in the coming decade.

Sri Lanka stops supplying gas for domestic use

9 May: Amidst the ongoing economic crisis, Sri Lanka’s leading liquefied petroleum gas (LPG) supplier Litro Gas Lanka Limited said that they are unable to supply gas to domestic consumers until new stocks arrive. Litro Gas chairman Vijitha Herath said only industrial gas stocks are available at the moment and the company asked people not to wait in queues. Herath said that they expect to pay US$7 million to import LPG on Friday and Saturday. Facing the worst economic crisis since independence, Sri Lankans have been facing shortages of many essential items, including food, medicine, fuel cooking gas, as well as hours-long power cuts.

Japan to take time phasing out Russian oil imports: PM Kishida

9 May: Japan will take time to phase out Russian oil imports after agreeing on a ban with other Group of Seven (G7) nations to counter Moscow’s invasion of Ukraine, Prime Minister (PM) Fumio Kishida said. There have been no ships loading Russian oil for Japan since mid-April, according to Refinitiv data. About 1.9 million barrels were exported from Russia to Japan in April, 33 percent down from the same month a year ago. The latest ban underlines a turn in Japan’s policy. Japan has said it would be difficult to immediately cut off Russian oil imports, which accounted for about 33 million barrels of Japan’s overall oil imports, or 4 percent, for 2021. It has already said it will ban Russian coal imports in stages, leaving just liquefied natural gas (LNG). Japan is in a particularly tough spot since it shut down the bulk of its nuclear reactors following the 2011 Fukushima nuclear disaster. Russia was Japan’s fifth-biggest supplier of crude oil and LNG last year. The Japanese government and companies own stakes in oil and LNG projects in Russia, including two on Sakhalin Island from which partners Exxon Mobil Corp and Shell PLC have announced they will exit.

Saudi Arabia lowers Arab Light oil price to Asia, Europe in June

8 May: Saudi Arabia’s lowered the price of its Arab Light crude grade to Asia and Europe for the month of June, according to a pricing document released by oil producer Saudi Aramco. The price of the Arab Light benchmark sold in the United States (US) in June was unchanged from the previous month, at US$5.65 per barrel above the Argus Sour Crude Index (ASCI). Arab Light sold in June in the Far East was priced US$4.40 per barrel above the average of the Oman and Dubai benchmarks, compared to a price differential of +US$9.35 in May. The world’s top oil exporter had raised crude prices for all regions in May, with those to Asia hitting all-time highs, as fears of disruption in Russian oil and gas supplies caused jitters in international energy markets.

OPEC+ strategy ensures market stability, balance: Kuwait Oil Minister

5 May: The Kuwaiti Oil Minister Mohamed al-Fares said that the OPEC+ strategy of monthly crude production increases ensures market stability and balance. The Minister said that the group, comprised of the OPEC and allies including Russia, was monitoring coronavirus lockdowns in Chinese cities and any possible supply disruptions. OPEC+ agreed to another modest monthly oil output increase, arguing that the producer group could not be blamed for disruptions to Russian supply and saying China’s coronavirus lockdowns threatened the outlook for demand.

International: Gas

Germany faces deep recession if Russian gas supplies are cut

10 May: A halt to Russian gas supplies to Germany would trigger a deep recession and cost half a million jobs, as Europe’s biggest economy tries to cut Russian energy imports. Achim Truger, a member of Germany’s Council of Economic Experts, said German industry a could suffer serious damage in the long term if Russian President Vladimir Putin decides to cut gas exports to Germany. Russia’s Gazprom cut Poland and Bulgaria off from its gas for refusing to pay in roubles, and threatened to do the same to others, raising fears that it could take similar action against Germany. Russian gas accounted for 55 percent of Germany’s imports last year, and Berlin has come under pressure to unwind a business relationship that critics says is helping to fund Russia’s war in Ukraine. German inflation hit its highest level in more than four decades in April, pushed higher by a spike in the price of natural gas and mineral oil products since Russia’s invasion of Ukraine.

Spain’s gas imports rise 16 percent driven by seaborne LNG purchases

9 May: Spain’s natural gas imports in March rose 16 percent from a year earlier, driven by more purchases of seaborne liquefied natural gas (LNG), government data showed. Spain imported the equivalent to 37,582 gigawatt hours (GWh) of natural gas in March, the data from Cores, an arm of the Energy and Environment Ministry, showed. LNG shipments jumped 75 percent and represented more than two thirds of the total imports, while purchases through pipelines, mainly from Algeria, fell 48 percent, Cores said. Spain re-exported the equivalent of 2,845 GWh of gas, 83 percent more than in March 2021. Russian gas accounted for 8.7 percent of Spanish imports in March, an increase of 1.5 percentage points compared to March 2021. In the first quarter of 2022, Spain’s imports of natural gas reached 113,306 GWh, the highest for a first quarter since 2008.

Energean discovers 8 bcm of gas in Athena well offshore Israel

9 May: Energean, which focuses on the Eastern Mediterranean, said it had made an 8 billion cubic meters (bcm) natural gas discovery in its Athena exploration well off the Israeli coast and lying between its Karish and Tanin fields. Athena could be developed by linking it to the floating production and storage vessel (FPSO) Energean plans to use to send gas into the Israeli market from Karish starting in the third quarter, the company said. Athena could also form part of a new development of fields off the coast of Israel, it said, adding that initial data suggested the region the company calls the Olympus Area could contain 58 bcm of gas. Energean said another option was to sell the gas to Egypt, by turning a memorandum of understanding to supply the country with 3 bcm a year into a binding deal.

Lithuania launches 508 km gas link with Poland costing 500 million

6 May: A gas pipeline connecting the Baltic states and Finland to the EU (European Union)’s single gas network became operational, the Lithuanian Ministry of Energy has announced. The official opening of the Lithuanian-Polish gas interconnector took place at the Jauniunai Gas Compressor Station, one of the main hubs of the Lithuanian gas infrastructure. Implemented by Lithuanian and Polish gas system operators Amber Grid and Gaz-System, this 508-km gas pipeline (GIPL) cost €500 million. The European Commission provided around 60 percent of the funding, while Latvia and Estonia also contributed. The pipeline will open the Western European gas market to Lithuania, Latvia, Estonia and Finland, the Lithuanian energy ministry said. Over the next five months, GIPL’s capacity to transport gas from Lithuania to Poland via the Klaipeda LNG terminal will reach 217,000 m3/h, or 2.4 GWh/h. Meanwhile, its capacity to transport gas from Poland to Lithuania will be 230,000 m3/h or 2.6 GWh/h.

Sempra sees decision on new Cameron LNG train in Louisiana in 2023

5 May: The US (United States) energy company Sempra Energy said that the venture that owns the Cameron liquefied natural gas (LNG) plant in Louisiana remains on track to make a final investment decision in 2023 to build a new liquefaction train at the plant. Separately, the company said its Sempra Infrastructure Partners unit entered into a non-binding agreement with TotalEnergies SE for Sempra’s Vista Pacífico LNG project under development in Mexico. In other LNG news, Japanese officials meeting in Washington are expected to propose new investment in existing US LNG plants. In addition to its stake in Cameron LNG, Sempra Infrastructure and partners are building an LNG export plant at its Costa Azul LNG import plant in Mexico and are developing LNG export projects at Port Arthur in Texas and Vista Pacifico in Mexico.

International: Coal

China April coal imports soar, driven by panic orders in early March

9 May: China’s coal imports surged 43 percent in April from March, driven by panic buying over concerns of supply disruptions stemming from Russia’s invasion of Ukraine. China shipped in 23.55 million tonnes (MT) of coal last month, data from the General Administration of Customs showed. That compares with 16.42 MT in March and 21.73 MT in April 2021. For the period of January-April, China brought in a total of 75.41 MT of coal, down 16 percent from shipments in the same period a year earlier. Benchmark Newcastle thermal coal hit a record high of US$440 a tonne in early March, fuelled by fears of tight supply as Western countries vowed to impose sanctions on Russia’s financial system and energy products after Russia invaded Ukraine. As global coal prices stayed high while the Chinese central government ordered miners to boost domestic output and capped local prices, Chinese traders then shunned expensive seaborne cargos in favour of domestic sources. China aims to churn out a record 12.6 MT of coal each day and maintain coal prices under term contracts at 570-770 yuan (US$84.99-114.81) a tonne. China’s finance ministry has cut import tariffs for all types of coal to zero – from 1 May 2022, until 31 March 2023 – aiming to ensure energy security amidst soaring global prices, but traders question whether it will drive up imports.

International: Power

Chinese power plants in Pakistan to shut down within days unless payments made

10 May: With more than 300 billion PKR in stuck-up dues, more than two dozen Chinese firms operating in Pakistan said that they will be forced to shut down their power plants unless payments are made upfront. About 25 representatives from Chinese independent power producers (IPPs) spoke one after the other and complained about the build-up of their dues and warned that without upfront payments they would shut down within days. Some of them said that while payments against power already supplied were not forthcoming and they had been financially handicapped due to the Covid-19 pandemic, the tax authorities had started taxing them at higher rates.

California says it needs more power to keep the lights on

6 May: California energy officials issued a sober forecast for the state’s electrical grid, saying it lacks sufficient capacity to keep the lights on this summer and beyond if heatwaves, wildfires or other extreme events take their toll. California has among the most aggressive climate change policies in the world, including a goal of producing all of its electricity from carbon-free sources by 2045. Supply gaps along those lines could leave between 1 million and 4 million people without power. Outages will only happen under extreme conditions, officials cautioned, and will depend in part on the success of conservation measures. In 2025, the state will still have a capacity shortfall of about 1,800 MW, according to the California Energy Commission, Public Utilities Commission, California Independent System Operator, and Newsom’s office. California’s electricity planning has been challenged as devastating wildfires have cut off transmission lines and extreme heat events and drought have hampered hydropower supplies.

Greece to set cap on electricity prices to relieve consumers: PM

5 May: The Greek government will set a ceiling on wholesale electricity prices to help consumers and businesses cope with their soaring energy costs, Prime Minister (PM) Kyriakos Mitsotakis said. The government’s support programme will be four-pronged and will refund up to 60 percent of all the surcharges electricity consumers have paid from December until May, Mitsotakis said. This refund will be limited to €600 and will cover all consumers with annual incomes of up to €45,000 for electricity consumed in their primary homes. Electricity producers will be asked to pay a “solidarity dividend” to society, meaning their windfall income will be taxed at 90 percent. The scheme will last for up to one year. Power costs have showed no signs of abating with consumers blaming a surcharge, applied by power suppliers and activated once the average monthly wholesale power price exceeds a specific limit, for ballooning power bills in recent months.

International: Non-Fossil Fuels/ Climate Change Trends

Botswana invites bids to build 200 MW solar plant

9 May: Botswana has invited bids from independent power producers (IPPs) to build a 200 megawatt (MW) power plant as the country looks to boost power generation and increase the proportion of renewable energy. The scope of the bid covers financing, construction, operation, and maintenance as well as decommissioning the plant at the end of its economic life, according to a document published by the country’s Ministry of Minerals and Energy. Submission of bids closes on 8 June. However, the country currently does not have any large-scale solar power generation and its 600 MW national energy demand is predominantly met by state-owned coal-fired plants and imports, primarily from South Africa.

California revisits proposal on reforming rooftop solar policy

9 May: California is asking solar companies, utilities, and others to weigh in yet again in a long-standing process to reform the state’s key rooftop solar power incentive, the state’s public utilities regulator said. The California Public Utilities Commission is seeking additional input into a proposal issued last year that was vilified by the solar panel installation sector as a jobs and industry-killer. Specifically, the agency is asking for feedback on whether solar panel owners should help fund low-income assistance and energy efficiency programmes and whether they should qualify for an additional bill credit, which would be phased out gradually, on top of the credits they receive for exporting power they do not use to the grid.

US Energy Department to commit US$2.25 bn to carbon storage program

5 May: The US (United States) Department of Energy intends to commit US$2.25 billion for projects to store carbon dioxide underground and help fight climate change, it said. The funding for carbon storage validation and testing over the next five years will come from the bipartisan infrastructure bill signed by President Joe Biden last year. The programme will look at storing carbon from projects including capturing emission from power plants and other industrial sites or removing carbon directly from the air. Capturing carbon emissions from power plants adds costs to the generation of electricity and companies typically want subsidies to help cover the expense. Direct capture, a nascent technology to suck carbon dioxide directly from ambient air, can cost up to US$600 per tonne of carbon captured. However, backers say the money beginning to pour into the technologies will lead to advances and cost cuts. Biden’s goal of decarbonizing the economy by 2050 could face a setback if his wider climate legislation is not passed by Congress. Many scientists said the first priority to curb climate change is to avoid emissions to begin with, but that carbon storage will likely be necessary to avoid the worst impacts from greenhouse gases.


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 2021 is the eighteenth 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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