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Monthly Market Intelligence                                                                                                31/01/20

A Month in Review...

There have been two key developments (both on the policy front) this month:

Coal cess: The government of India has proposed to waive the coal cess otherwise known as the clean energy cess of INR 400/ton. It stems from the need to support the power industry’s growing debts by exempting them from the cess. Additionally, the intention of the proposal is to provide leeway to install air pollution control equipment. The push to take the proposal forward came from the Federation of Indian Mineral Industries (FIMI) sighting the need for the government to ensure longevity of coal power plants. However, critics of this proposal argue that without the tax, coal has the potential to become cost competitive with renewable energy eventually stalling RE growth as it would encourage coal to continue to be primary power source in the country. 

Round-the-clock power supply: On 2nd January, the Ministry of New and Renewable Energy released a draft scheme for supply of round-the-clock (RTC) power from renewable and thermal power projects.  The draft scheme makes the case for “reverse bundling” wherein cheap renewable power can be bundled with more expensive thermal power. This is intended to make sure that there is continuous supply of electricity even during hours that renewables are not available. Thus would make it, both cost effective and reliable for utilities. The draft scheme suggests a minimum of 51% of the annual energy to be supplied by renewable power with or without storage. 

The scheme aims to ramp up renewable energy capacity additions as well as fulfillment of DISCOMs’ Renewable Purchase Obligation (RPO). The response to this has largely been pessimistic as RE developers perceive this to be an effort to push thermal energy in an era where it should phased out. 

India’s position on Article 6 at COP25: Explained

"Undervalued credits not only make it much cheaper for polluters to buy off offset credits (meaning the price to pollute becomes much cheaper); it also discourages project installers to implement newer projects that can be eligible for CERs because their returns are significantly lower. At COP 25, India along with other developing countries such as Brazil and China pushed for the stance that credits generated under CDM should be transferred to the new carbon market under Article 6 as these are projects that have been validated by UNFCCC. If sold, India has the potential to earn around INR 50 billion from the unsold carbon offset credits."  Read full article...
The dark side of the sun: Clean energy’s wasteful impact

"As we get absorbed into this whirlwind of renewable energy development, it is important to remember that solar energy also comes with certain troubling implications. Most solar panels have a warranty of about 20–25 years, beyond which significant non-performance may lead to decommissioning. Depending on the type of panel (crystalline or thin film), impact of the location, and the care taken during maintenance, panels may outlive their warranty period—or demonstrate premature failures."  Read full article...

The cost implications of BS IV to BS VI transition

"The iterations of BS norms consist of primarily three areas: technological upgradation, better fuel grade and stricter testing requirements. Overtime, emission norms have helped manufacturers phase out lead content in fuels. Amongst other requirements, BS VI norms have also introduced particle number (PN) limit of 6.0*1011/kWh and a further tightening of particulate Matter (PM) limit from 25 mg/km to 4.5 mg/km.  BS VI has been touted to be one of the most challenging yet for the automotive sector. The impending transition from BS IV norms to BS VI is expected to bring about newest automotive technology in Indian cars as well as setting a new benchmark for future emission standards."  Read full article...

Opinion: India should go beyond UNFCCC CoPs to garner financing and technology

"Although there are tremendous ongoing efforts on climate adaptation and mitigation there is need for India to continuously engage with UNFCCC and push for finance and technology transfer. Technologies like Early Warning Systems, Climate Impact Assessment Tools and Carbon Capture and Storage, Renewable Energy Storages and technologies for improving Energy Efficiency are required. Funding for adaptation is particularly required for the vulnerable states and regions. India needs to look beyond UNFCCC CoPs and engage with countries that have high technical capacities on these through north-south and south-south cooperation to exchange knowledge, develop financing mechanisms and technology transfers for climate actions." Read full article...
Key News and Developments
MNRE issues draft policy for round-the-clock supply of bundled renewable power
"The ministry of new and renewable energy (MNRE) has proposed a draft policy for the supply of Round-The-Clock (RTC) power to discoms which would be a mix of renewable energy and electricity generated in coal-based plants. The idea is to address the biggest issue with large scale uptake of clean energy – intermittency. Solar and wind energy are not available throughout the day severely limiting their use in modern grids." Read the full article...
India in talks with World Bank for Modi’s global electricity grid plan
"India has started consultations with the World Bank as its technical partner to implement an ambitious global electricity grid plan pitched by Prime Minister Narendra Modi. With the world grappling with climate change concerns, a senior government official said the multilateral funding organization may prepare a feasibility report for the project announced in October 2018, that can further bolster India’s image as a clean energy champion." Read the full article...

India tops clean energy investment rankings among emerging markets
"In a first, India has topped the clean energy investment rankings among 104 emerging markets worldwide in a BloombergNEF survey. In the top five, followed by India, were Chile, Brazil, China, and Kenya. The survey evaluated the ability of the emerging markets to attract capital for low-carbon energy sources while building a greener economy. “India’s aggressive policy framework and copious capacity expansions propelled it to first place in 2019, from second in 2018.” Read the full article...

Climate change threatens around half of world GDP, says WEF study
"Flagging huge risks to the economy from dangers of biodiversity loss and climate change, a WEF study on Sunday said businesses are more than dependent on nature with an estimated exposure of $44 trillion or half of the world GDP. Releasing the Nature Risk Rising Report ahead of its 50th Annual Meeting, the World Economic Forum said about 25 per cent of our assessed plant and animal species are threatened by human actions, with a million species facing extinction, many within decades.” Read the full article...

Other top stories

Over 150 GW of renewable energy projects installed or in pipeline
Sea level rise to impact more population in Asia, including India: Moody’s report

Proposed Carbon Tax Waiver On Coal May Pose Risks To India's Renewables Growth: Fitch
2019 capped world’s hottest decade in recorded history
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