It was a hectic year for the Indian power sector with significant activity on many fronts. On the generation front, large capacities were added in the coal, hydro and nuclear power segments with public sector majors contributing the lion’s share. Private players, on the other hand, focused on expanding their clean energy portfolios. On the equipment side, while fresh ordering for new plants remained slow in the domestic market, private and public players received a significant number of contracts from the overseas markets as well as domestic orders for the upgradation and modernisation of existing projects. Further, as part of the government’s distribution schemes and reforms, these players secured a significant number of transmission and distribution (T&D) contracts. Meanwhile, few fresh power purchase agreements (PPAs) were signed. In fact, private majors faced serious setbacks as their existing contracts were cancelled or renegotiated by state utilities. Meanwhile, a large number of domestic companies signed MoUs with international players to augment their renewable capacity and step up efforts in the field of smart grid technology. Merger and acquisition (M&A) deals were back in the spotlight as players looked to scale up their capacities and offload debt from their balance sheets. Power Line presents a roundup of all the developments related to major players in the power sector during the past one year or so…
Key projects commissioned – Conventional power generation
During the past 12 months, capacity addition in the thermal power segment was led by NTPC Limited. The sector major commissioned a significant number of projects, thus crossing the 50 GW milestone for installed capacity in April 2017. In the private sector as well, RattanIndia Power Limited, Sembcorp Gayatri Power Limited, Jaiprakash Power and India Power Corporation commissioned key thermal projects. In the hydropower segment, NHPC Limited and Teesta Urja Limited (TUL) were among the major players. Meanwhile, in the nuclear power segment, Nuclear Power Corporation of India Limited (NPCIL) connected the second unit of its Kudankulam project to the grid.
- In December 2016, NTPC Limited commissioned the 800 MW Unit 1 of the 4,000 MW Kudgi super thermal power project (STPP) at Bijapur in Karnataka. In March 2017, it commissioned the 660 MW second unit of the 1,320 MW Mouda super thermal power station (TPS) Stage II in Maharashtra, the 250 MW second unit of the 750 MW Bongaigon coal-based power plant in Assam, and the 660 MW Unit 1 of the Solapur STPP in Maharashtra. In January 2017, NTPC Limited’s subsidiary Bhartiya Rail Bijlee Company Limited commissioned the first unit (250 MW) of the 1,000 MW Nabinagar coal-based power project at Aurangabad in Bihar. The second unit of the project was commissioned in April 2017. Another NTPC subsidiary, Kanti Bijlee Utpadan Nigam Limited, commissioned the 195 MW Unit 2 of the Muzaffarpur TPS Stage II in Bihar in March 2017. Recently, in September 2017, NTPC Limited commissioned the 250 MW Mandsaur solar project in Madhya Pradesh. Currently, the total installed capacity of the NTPC Group stands at 51,676 MW.
- In September 2016, NPCIL connected the second 1,000 MW unit of the 4,000 MW Kudankulam nuclear power plant in Tamil Nadu to the grid. The unit commenced commercial operation in April 2017.
- In August 2016, NHPC Limited commissioned the 40 MW Unit 4 of the 160 MW Teesta Low Dam IV hydroelectric power (HEP) project in West Bengal, thus fully commissioning the entire project. The other three units were commissioned in February, March and July 2016.
- In April 2017, Bharat Heavy Electricals Limited (BHEL) commissioned the second 800 MW unit of the 1,600 MW Yeramarus supercritical TPS in Karnataka, being set up by Raichur Power Corporation Limited, a joint venture (JV) between BHEL and Karnataka Power Corporation Limited. The first unit of the coal-based project was commissioned by BHEL in March 2016.
- In December 2016, coal mining company Singareni Collieries Company Limited (SCCL) commissioned the 600 MW Unit 2 of its maiden thermal project, the 1,200 MW Singareni thermal power project (TPP), at Adilabad in Telangana. With this, the coal-based plant stands fully commissioned. The first unit of the TPP was commissioned in March 2016.
- In February 2017, TUL fully commissioned the 1,200 MW Teesta Stage III HEP in Sikkim. TUL was formed to develop the project and it has a build-own-operate-transfer (BOOT) contract with the Sikkim government for 35 years. The project comprises six 200 MW units.
- In May 2017, Prayagraj Power Generation Company Limited, a subsidiary of Jaiprakash Power Ventures Limited, commissioned the third and last unit of its 1,980 MW Bara TPP in Uttar Pradesh.
- In February 2017, private major Sembcorp Gayatri Power Limited (formerly known as NCC Power Projects) commissioned the second unit (660 MW) of its 1,320 MW Krishnapatnam TPP at Nellore in Andhra Pradesh. The first unit of the TPP was commissioned in September 2016.
- In May 2017, RattanIndia Nasik Power Limited commissioned two units of 270 MW each of its 1,350 MW Nasik coal-based power project at Sinnar in Maharashtra. Earlier, in February 2017, the company had commissioned Unit 2 of 270 MW of the project.
- In June 2017, India Power commissioned the first 150 MW unit of its 450 MW TPP in West Bengal. The company has invested nearly Rs 35 billion in this power project.
- In November 2016, Essar Power Hazira Limited, a wholly owned subsidiary of Essar Power Limited, commissioned the 135 MW Unit 2 of a 270 MW multi-fuel captive power plant (CPP) at Hazira in Gujarat. With this, the CPP stands fully commissioned. The first unit of the CPP was commissioned in July 2015.
Key projects commissioned – Transmission and distribution
The country’s largest transco, Power Grid Corporation of India Limited (Powergrid) led capacity addition in the transmission segment with the commissioning of several key projects, including Pole II of its ambitious Champa-Kurukshetra high voltage direct current (HVDC) link.
- In September 2017, Powergrid commissioned Pole II of the ±800 kV Champa-Kurukshetra HVDC transmission system. The system is part of the western and northern HVDC interconnector for independent power producer (IPP) projects in Chhattisgarh. The first 1,500 MW pole was commissioned in March 2017. In addition, the company commissioned a 2,576 ckt. km HVDC transmission line. Executed at a cost of Rs 63 billion, the project will enable transfer of power from IPP generation projects coming up in Chhattisgarh to demand centres in the northern region. Further, in April 2017, Powergrid commissioned the 765/400 kV double-circuit Wardha (Maharashtra)-Nizamabad (Telangana) transmission line along with the 765/400 kV Nizamabad substation. The project was fast-tracked and completed well ahead of its scheduled completion date of May 2018. In October 2016, Powergrid Vizag Transmission Limited, a wholly owned subsidiary of Powergrid, completed the 668 ckt. km 765 kV double-circuit Srikakulam-Vemagiri transmission line under the System Strengthening in Southern Region for Import of Power from the Eastern Region project. In the same month, Powergrid Unchahar Transmission Limited, another wholly owned subsidiary of Powergrid, completed the 106 ckt. km 400 kV double-circuit Unchahar-Fatehpur transmission line for the associated transmission system of the 1,050 MW Feroz Gandhi Unchahar TPP at Raebareli, Uttar Pradesh.
- In January 2017, private transmission major Sterlite Power Transmission Limited commissioned the Purulia-Kharagpur transmission project. The project was won through competitive bidding. It comprises two 400 kV double-circuit lines, the 112 km Purulia-Ranchi and 161 km Kharagpur-Chaibasa lines. Sterlite Power will operate and maintain the project for 35 years.
- In June 2017, Tata Power Delhi Distribution Limited (TPDDL) commissioned a 66/11 kV substation at Narela Sub-city 1, New Delhi, at a total cost of Rs 206.2 million. The unmanned substation has an installed capacity of 50 MVA and consists of 16 outgoing feeders at the 11 kV level.
While a few power purchase agreements (PPAs) were signed by key players, the past year mostly saw states either negotiating tariffs or cancelling their agreements with developers as the PPA tariffs exceeded the spot tariffs post the auctions held under the competitive bidding regime.
- In July 2017, PTC India Limited signed PPAs for 1,050 MW of wind capacity awarded in the first round of the wind power auction. While Mytrah Energy, Inox Wind and Ostro Kutch Wind tied up for 250 MW of capacity each, Green Infra and Adani Green Energy tied up for 249.9 MW and 50 MW, respectively, to supply power at Rs 3.46 per unit. PTC will supply this wind power to the discoms of states including Uttar Pradesh, Bihar and Jharkhand, which will help them meet their non-solar renewable purchase obligations.
- In May 2017, the Uttar Pradesh government cancelled long-term PPAs for about 3,800 MW of capacity as the generation tariff under these agreements was higher than the spot market prices. In a bidding round conducted by Uttar Pradesh Power Corporation Limited in August 2016, around 18 companies including Jindal Power Limited (JPL), GMR Energy Limited (GEL), Adani Power Limited and JSW Energy Limited were shortlisted to supply power under 15-year PPAs at a weighted average tariff of Rs 4.16 per unit. The state government attributed the decision to cancel PPAs to an expected improvement in the state’s power situation as it recently joined the central government’s 24×7 Power for All scheme. Subsequently, in June 2017, the state government cancelled PPAs for seven coal-based power plants aggregating 7,040 MW of capacity. These projects were awarded to Lanco Infratech Limited, Bajaj Energy, Welspun Energy and Unitech Machines, among others, in 2011. However, the developers failed to perform and duly obtain long-term coal linkage from the standing linkage committee, despite three time extensions from the state government, the last one of which expired on March 31, 2017.
- In April 2017, the Delhi Metro Rail Corporation and Madhya Pradesh Power Management Company entered into a PPA with Rewa Ultra Mega Solar Limited for the purchase of power from the 750 MW Rewa ultra mega solar power project (UMSPP) in Madhya Pradesh. With this, the Rewa UMSPP has become the first solar power project to conduct interstate sale of power.
- In April 2017, the Supreme Court disallowed Tata Power and Adani Power to charge compensatory tariffs, on account of the Indonesian coal price hike, for their power plants in Mundra, Gujarat. The Supreme Court directed the Central Electricity Regulatory Commission to adopt a fresh approach to resolve the matter and determine what relief should be granted to power generators that fall within Clause 13 of the PPA, dealing with change in regulations under Indian conditions.
- In February 2017, the Jammu & Kashmir government directed its Power Development Department to terminate the PPA with GVK Developmental Projects Private Limited for the 850 MW Ratle HEP. Reportedly, GVK had suspended work on the HEP, which is to be set up on a BOOT basis on the river Chenab at Kishtwar.
- In January 2017, NHPC Limited signed a PPA with Mizoram’s Power and Electricity Department for the supply of 1,400 MW of power from two upcoming HEPs for a period of 35 years. The projects, the 600 MW Tawang I HEP and the 800 MW Tawang II HEP in Arunachal Pradesh, are currently awaiting clearance for commencing construction, and are estimated to cost Rs 61.32 billion and Rs 78.29 billion respectively.
- In December 2016, NTPC’s subsidiary, NTPC Vidyut Vyapar Nigam Limited signed a PPA with the Nepal Electricity Authority for the supply of 160 MW of power through the Muzaffarpur-Dhalkebar transmission line during January-May 2017.
Some of the key highlights on the fuel front in the past year have been the implementation of the SHAKTI (Scheme for Harnessing and Allocating Koyla Transparently in India) scheme by coal major Coal India Limited (CIL), the approval for Adani Enterprises’ Carmichael coal project in Australia, and NTPC’s foray into coal mining.
- In February 2017, NTPC commenced coal mining from its Pakri Barwadih coal mine at Hazaribagh in Jharkhand. The company flagged off the first rake of coal from the mine on February 16, 2017. By 2018, 2-3 million tonnes (mt) of coal is likely to be produced from the mine. Going forward, the mine is expected to have a capacity of 18 mt per annum. In a separate development, in April 2017, NTPC Tamilnadu Energy Company Limited (NTECL) signed an MoU with SCCL for the supply of 1 mt of coal during 2017-18. NTECL is a JV of NTPC and Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO).
- In August 2017, CIL issued the first tender under the new coal policy SHAKTI for providing coal linkage to TPP through the auction route. Earlier, in October 2016, CIL had entered into an agreement with state utility Andhra Pradesh Power Generation Corporation Limited to substitute imported coal (used for blending) with Raniganj coal (with high energy value of around 6,100 kCal and low ash content) at the latter’s 1,600 MW Sri Damodaram Sanjeevaiah TPS in Krishnapatnam. Under the arrangement, the genco will substitute imported coal with 1 mt of coal from Eastern Coalfields Limited’s Raniganj coalfield.
- In October 2016, the “prescribed project” status of Adani Mining Private Limited’s $21.7 billion Carmichael coal mine project in the Galilee basin, in Queensland, Australia, was renewed by the Queensland government. The prescribed project status was further extended to include water infrastructure. The government also declared combined mine, rail and associated water as critical infrastructure for the state. In June 2017, Adani’s board gave its final approval to proceed with the project.
- In October 2016, Essar Power Limited paid the third (and last) instalment of around Rs 170 million towards the upfront payment for the Tokisud north coal block in Jharkhand. The company had won the coal block in 2015 in the coal block auction undertaken by the Ministry of Power.
During the past 12 months, a diverse set of projects were awarded. Tata Power Limited and CESC Limited received distribution franchise contracts for Rajasthan. Meanwhile, Torrent Power Limited’s franchise agreement for the Bhiwandi circle was renewed. In the transmission segment, Powergrid received a 765 kV transmission project in the eastern region and Adani Transmission Limited acquired two special purpose vehicles (SPVs) in Rajasthan, both through competitive bidding. In addition, Sterlite Power Grid Ventures Limited secured transmission projects in Brazil.
- In August 2017, Adani Transmission Limited acquired 100 per cent equity stake in two SPVs of Rajya Vidyut Prasaran Nigam Limited, Barmer Power Transmission Service Limited and Thar Power Transmission Service Limited. The company acquired these SPVs for the construction of 132 kV substations along with associated transmission lines. The project was secured in June 2016 through the competitive bidding route.
- In May 2017, Sterlite Power Grid Ventures Limited won two transmission projects worth Rs 13.5 billion, auctioned by the Agência Nacional de Energia Elétrica, Brazil’s national power regulator. This marked the first major foray of an Indian power company into Brazil.
- In April 2017, Tata Power secured the distribution franchise contract for the Ajmer circle in Rajasthan. The company signed an agreement with Ajmer Vidyut Vitran Nigam Limited for electricity distribution in Ajmer as a franchisee for 20 years.
- In February 2017, Powergrid secured the 765 kV System Strengthening Scheme in Eastern Region XVIII under tariff-based competitive bidding. The project entails the setting up of 765/400 kV 3,000 MVA substations at Medinipur and Jeerat in West Bengal and associated transmission lines.
- In February 2017, CESC Limited secured the distribution franchise contract for the Bikaner distribution area in Rajasthan. The franchisee is spread over 155 square km, covering 142,000 consumers. The company secured the 20-year contract for Bikaner under competitive bidding undertaken by the state government. It already operates as a distribution franchisee at Kota and Bharatpur in Rajasthan.
- In December 2016, TPL signed a renewal and amendment agreement (RAA) for its distribution franchise agreement (DFA) with Maharashtra State Electricity Distribution Company Limited (MSEDCL) for the distribution of power in the Bhiwandi circle. The RAA has extended the DFA for another 10 years with effect from January 26, 2017. In 2006, TPL had entered into the DFA with MSEDCL for a period of 10 years.
MoUs and JVs
Some of the key MoUs signed and JV companies formed in the past year are as follows:
- In July 2017, Energy Efficiency Services Limited signed an MoU with the National Energy Services Company, Kingdom of Saudi Arabia, to implement energy efficiency programmes and step up demand-side measures in the country.
- In July 2017, BSES Rajdhani Power Limited (BRPL) and The Energy and Resources Institute (TERI) signed an MoU to collaborate on various fronts over the next two years. These include solar rooftop, electric vehicles (EVs), energy storage systems, energy efficiency and smart grid technologies.
- In June 2017, the Adani Group signed a MoU with the China-based East Hope Group to set up a manufacturing unit for solar power generation equipment in the Mundra Special Economic Zone, Gujarat. The East Hope Group will invest over $300 million in the project.
- In April 2017, GEL and Malaysia-based TNB Repair and Maintenance Sdn Bhd signed an agreement for setting up a JV to provide operations and maintenance (O&M) services. The JV was formed to set up a refurbishment facility in India and identify business opportunities in the Indian market to provide O&M services.
- In March 2017, Powergrid signed a memorandum of cooperation with the Norwegian Centre of Expertise Smart Energy Markets covering smart grid, capability development and other related areas.
- In December 2016, NTPC signed an MoU with National Aluminium Company Limited for setting up a 2,400 MW coal-based CPP at Dhenkanal, Odisha.
- In November 2016, Larsen & Toubro (L&T) signed a long-term technical licence agreement with Japan-based Chiyoda Corporation for flue gas desulphurisation (FGD) technology. Under the agreement, L&T has the exclusive right to undertake the engineering, procurement and construction (EPC) of the FGD systems.
- In November 2016, ABB India Limited signed an MoU with IIT Madras for developing a multi-village microgrid model. As part of the MoU, signed under the government’s Uchchatar Avishkar Yojana, ABB and IIT Madras aimed to develop a power management system that would enable the integration of individual solar photovoltaic rooftop plants into microgrids in villages.
- In October 2016, Transformers and Rectifiers (India) Limited entered into an agreement with China-based Jiangsu Jingke Smart Electric Company Limited to form a JV for the manufacturing and marketing of transmission and distribution (T&D) products in India. As per the agreement, the JV was to be involved in the manufacturing of gas-insulated switchgear systems and distribution products for 220 kV and below and 40.5 kV and below respectively.
- In September 2016, India Power Corporation Limited and Germany-based Uniper entered into an agreement to set up the JV India Uniper Power Services, which offers services including O&M, asset monitoring software and analytical tools, flexibilisation of units, life cycle extension, and supply and integration of pollution control equipment. In the same month, the former collaborated with the United States Trade and Development Agency for implementing smart grid technologies in Gaya, Bihar.
Key equipment contracts – Transmission and distribution
Several equipment contracts have been awarded in the past year to key industry players for T&D works. These include L&T, KEC International Limited, Kalpataru Power Transmission Limited (KPTL), ABB and BHEL.
- L&T secured numerous orders for rural electrification in the past year. In September 2016, it secured EPC orders worth Rs 8.26 billion. It subsequently secured similar contracts worth Rs 5.71 billion in November 2016 and Rs 10.36 billion in December 2016. Further, in February 2017, L&T Construction secured a contract from West Bengal State Electricity Distribution Company Limited (WBSEDCL) for strengthening the sub-T&D network in the urban area of Nadia district, West Bengal. L&T Construction also secured international T&D orders from the Oman Electricity Transmission Company. In April 2017, it secured an order worth Rs 52.5 billion from the Qatar General Electricity and Water Corporation for power transmission and network expansion. This is the company’s single largest order in the Middle East.
- In October 2016, KEC International Limited secured T&D orders aggregating Rs 8.59 billion in the domestic and international markets. In the following month, the company received orders worth Rs 3.81 billion. In the domestic market, the company received EPC orders worth Rs 6.31 billion for the setting up of 765 kV and 400 kV transmission lines in October 2016 and a Rs 1.41 billion contract from Powergrid for the supply of substation packages in November 2016. Meanwhile, in the international market, the company received supply orders aggregating Rs 2.28 billion across the Americas and Africa, and turnkey orders for constructing 132 kV substations in Bangladesh and a 400 kV transmission line in Bhutan in October and November respectively.
- In January 2017, KPTL secured orders worth Rs 4.4 billion in international markets. In March 2017, KPTL received orders worth Rs 12 billion from various domestic and international utilities including a Rs 4.02 billion order from Transmission Corporation of Telangana Limited (TS Transco), and a Rs 3.36 billion order for a transmission project in Abu Dhabi. In addition, it received orders worth Rs 10.81 billion for several works including railway electrification, and two orders worth Rs 7.63 billion for laying of pipelines and associated EPC works.
- In January 2017, a consortium of ABB and BHEL secured a transmission project from Powergrid for the integration of thermal and wind energy into the grid. The scope of the project included the construction of the 1,830 km ultra HVDC 800 kV Raigarh (Chhattisgarh)-Pugalur (Tamil Nadu) transmission line for linking the central and southern regions. The total value of the project, with a capacity of 6,000 MW, is around Rs 57 billion and ABB’s share in the order stands at Rs 43.5 billion.
- In April 2017, ABB secured an order worth Rs 1.78 billion from Power Grid Company of Bangladesh Limited to supply new substations and upgrade old ones in the south-eastern parts of Bangladesh. Recently, in August 2017, ABB received an order from Himachal Pradesh State Electricity Board Limited for the upgradation of 20 substations in Himachal Pradesh. ABB will deploy its electronic relays for the protection, control, measurement and supervision of power systems at all the substations.
- In January 2017, BHEL secured a turnkey order worth Rs 960 million from Powergrid for the augmentation of three extra high voltage substations in Karnataka as part of the Green Energy Corridors project. These are the 400/220 kV substation at Tumkur (Pavagada), the 400 kV substation in Mysore and 400/220 kV substation at Tumkur (Vasantnarsapur).
- In March 2017, Siemens Limited in association with Sumitomo Electric Industries Limited secured an order worth $520 million (Rs 34 billion) from Powergrid to supply equipment for the ±320 kV Pugalur (Tamil Nadu)-Trichur (Kerala) HVDC system. The project is the first HVDC link in India based on voltage source converter technology and is scheduled for completion by 2020.
- In November 2016, IL&FS Engineering and Construction Company Limited secured a Rs 1.49 billion turnkey order from Madhyanchal Vidyut Vitran Nigam Limited for carrying out rural electrification works under the Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY). The project, funded by the Rural Electrification Corporation, is expected to be completed by November 2017. Further, in January 2017, the company received a letter of intent from WBSEDCL for carrying out rural electrification works under DDUGJY and the Integrated Power Development Scheme at a contract value of Rs 5.15 billion and expects to complete the work within 24 months.
- In September 2016, Technofab Engineering Limited received a Rs 2.27 billion contract from Powergrid for the construction of 220 kV substations. The scope of the contract includes the construction of substations in Jharkhand and Uttar Pradesh along with associated lines. Further, in February 2017, Technofab secured two orders aggregating Rs 2.2 billion from Powergrid for rural and industrial electrification works in Tripura.
- In March 2017, the engineering products segment of Skipper Limited secured new contracts worth Rs 4.05 billion from various central and state transmission utilities. Under the contracts, the company will supply transmission towers to Powergrid, TS Transco and Power Transmission Corporation of Uttarakhand.
- In June 2017, CMI Limited secured an order worth Rs 99.7 million from BHEL for the supply of high tension XLPE cables within a period of four months.
- In November 2016, Sterling and Wilson received a Rs 2.5 billion contract from Powergrid for the expansion of 400 kV and 132 kV substations across five north-eastern states (Assam, Arunachal Pradesh, Manipur, Nagaland and Tripura). The work under the contract is expected to be completed by June 2018.
- In October 2016, Isolux Corsan secured a Euro 22.1 million contract from Haryana Vidyut Prasaran Nigam Limited for the construction of three transmission lines with a total line length of 290 km.
Key equipment contracts – Generation
In the generation segment, a series of equipment contracts were awarded, with BHEL receiving the highest number of contracts.
- In May 2017, BHEL received the notice to proceed with its order worth Rs 100 billion for setting up the 1,320 MW Maitree STPP in Bangladesh, awarded by Bangladesh India Friendship Power Company Private Limited, a 50:50 JV between NTPC and the Bangladesh Power Development Board. In the same month, Ramagundam Fertilizers and Chemicals Limited awarded a contract to BHEL for a steam and power generation package. Earlier, in September 2016, BHEL had secured a Rs 1.33 billion contract from NHPC Limited for the renovation and modernisation (R&M) of the latter’s 180 MW Bairasiul HEP. It is NHPC’s first HEP where R&M works will be carried out for life extension. In the following month, BHEL secured two orders aggregating Rs 4.3 billion for R&M from Odisha Hydro Power Corporation Limited and NHPC.
- In November 2016, Reliance Infrastructure (RInfra) secured a Rs 36.75 billion EPC contract from NLC India Limited through international competitive bidding for setting up two lignite-based plants aggregating 500 MW of capacity. The plants, based on circulating fluidised bed combustion technology, are scheduled to be commissioned in 2019.
- In October 2016, BGR Energy Systems Limited secured a Rs 26 billion EPC contract from TANGEDCO for the execution of balance of plant (BoP), including civil works for the 800 MW North Chennai supercritical TPP Stage III, scheduled to be completed in 2019. Further, in November 2016, the company won a Rs 27.89 billion turnkey contract through international competitive bidding for BoP from Neyveli Uttar Pradesh Power Limited for the 1,980 MW Ghatampur supercritical TPP in Uttar Pradesh, scheduled to be completed by 2021.
- In October 2016, a consortium of NCC Limited, and BGR Mining and Infra Private Limited secured the mine developer and operator contractor from West Bengal Power Development Corporation Limited for the Pachhwara North coal block project at Pakur, Jharkhand. The scope of the contract includes mine development, excavation of over-burden and coal transportation. In November 2016, GE Power Limited secured a Rs 1.8 billion (around $28 million) contract from BHEL for the supply of two 800 MW supercritical boilers for NTPC’s 1,600 MW Telangana STPP Phase I at Karimnagar, scheduled to be commissioned in 2020. The following month, it secured another order worth Rs 2.71 billion from BHEL for the supply of components and services for supercritical steam generator island packages for two coal-based power projects, the 1,600 MW Uppur TPP and the 800 MW North Chennai supercritical TPP Stage III. Further, in May 2017, the company signed an agreement with Hindalco Industries Limited to upgrade its 700 MW Renusagar CPP in Uttar Pradesh.
- In May 2017, Siemens Limited secured an order from Vedanta Limited for implementing its Digital Fleet Centre Solution to connect the power plant assets at the Talwandi Sabo power plant in Punjab and Bharat Aluminium Company Limited in Chhattisgarh.
Mergers and acquisitions
The sector continued to witness several mergers and acquisitions (M&As), particularly in the renewables segment. Key M&A deals in renewables include Tata Power’s acquisition of Welspun, merger of Orient Green Power with IL&FS, and Japanese firm JERA’s investment in ReNew Power. Other important M&A deals during the past year have been NTPC Limited’s acquisition of a TPP from Rajasthan’s state genco as well as GEL’s stake sale to Malaysia’s largest power utility.
- In September 2017, ABB announced the acquisition of GE Industrial Solutions – the latter’s global electrification solutions business. The deal value is pegged at $2.6 billion with the transaction expected to be operationally accretive in year one. With the acquisition, ABB foresees potential cost synergies of $200 million annually, post five years of completion of the deal.
- In April 2017, the Australia-based Macquarie Group agreed to buy 330 MW of operational solar assets from Hindustan Powerprojects Private Limited. The deal is estimated to have a total value of $660 million.
- In February 2017, J.P. Morgan-backed Leap Green Energy Private Limited entered into a definitive agreement to purchase Inox Renewables Limited’s entire wind power capacity totalling 260 MW. The deal has an estimated enterprise value of over Rs 10 billion.
- In February 2017, Japanese firm JERA bought a 10 per cent stake in ReNew Power Ventures Private Limited for $200 million through the subscription of newly issued shares. The deal valued ReNew Power at $2 billion. JERA is a JV between two of Japan’s largest utilities, Tokyo Electric Power and Chubu Electric Power, and operates 6 GW of energy assets globally.
- In January 2017, RInfra completed the sale of its entire 4.12 per cent stake in the Indian Energy Exchange (IEX) for a consideration of Rs 1.03 billion. With this, the IEX has achieved a valuation of Rs 25 billion.
- In January 2017, Orient Green Power and IL&FS entered into a non-binding agreement for the merger of their wind energy assets. The merged entity will have a total operational wind capacity of 1.2 GW.
- In November 2016, GEL completed its 30 per cent stake sale to Malaysia’s largest electricity utility, Tenaga Nasional Berhad (TNB) for a cash consideration of around Rs 20 billion ($300 million), which implies an equity value of around Rs 66.65 billion ($1 billion). Following this, GMR Infrastructure (and its associates) and TNB will hold 52.14 per cent and 30 per cent stake in GEL respectively. In August 2017, GEL entered into an MoU with an external party to sell its 220 MW barge-mounted gas-based power plant in Kakinada, Andhra Pradesh, for $63 million, as it has not been generating energy since 2013 due to the shortage of natural gas.
- In October 2016, Suzlon Energy Limited offloaded a 49 per cent stake in two upcoming 15 MW solar power projects at Ramannapet and Kamareddy in Telangana to Canadian Solar for around Rs 264 million.
- In October 2016, Adani Transmission Limited completed the acquisition of GEL’s operational transmission assets. Following the acquisition, the company held a 74 per cent stake in Maru Transmission Service Company Limited and a 49 per cent stake in Aravali Transmission Service Company Limited.
- In January 2017, NTPC Limited signed a non-binding MoU with Rajasthan Rajya Vidyut Utpadan Nigam Limited and Rajasthan Urja Vikas Nigam Limited for the takeover of the 1,660 MW Chhabra TPP at Baran in Rajasthan. As per the MoU, NTPC will take over four 250 MW operational units (at a cost of Rs 50 billion) and two 660 MW under-construction units of the coal-based power plant. However, due to the company’s non-agreement on tariffs with Rajasthan’s state distribution companies, the deadline for NTPC to take over the Chhabra power plant has been extended to September 2017 from May 2017. NTPC proposes to take up the modernisation of the plant, which would raise tariffs by about 10 paise per unit. In addition, NTPC has asked the state to guarantee a minimum amount of power offtake, whereas the Rajasthan utilities have insisted on buying power from the plant as per the merit order list.
- In September 2016, Tata Power Renewable Energy Limited (TPREL), a wholly owned subsidiary of Tata Power, completed the acquisition of Welspun Renewables Energy Private Limited at an enterprise value of Rs 92.49 billion. TPREL had signed a share purchase agreement for the acquisition in June 2016.
Entry into the electric vehicles segment
In August 2017, Tata Power, in collaboration with Mass-Tech Controls Private Limited, installed its first EV charging facility at a receiving station in Mumbai. The company plans to set up charging stations at various locations in Mumbai in the future.
- In June 2017, NTPC set up charging stations for EVs at its offices in Noida and Delhi. The move is aimed at promoting clean transportation and is expected to eventually drive demand for power. The utility plans to set up more charging stations across Delhi and other cities in the near future.
- In April 2017, BHEL and the Indian Space Research Organisation (ISRO) announced plans to develop low-cost lithium-ion batteries for EVs. BHEL is likely to set up a production plant, while ISRO will provide support for scale-up, cost optimisation, research and development for alternative chemistry, and buyback commitment.
- In April 2017, THDC India Limited received environmental clearance for its 1,320 MW Khurja STPP in Bulandshahr, Uttar Pradesh. Planned at a cost of Rs 97.48 billion, the coal-based project is likely to help in meeting the power demand in northern India.
- In February 2017, the Expert Appraisal Committee under the Ministry of Environment, Forest and Climate Change recommended green clearance for the 3,097 MW Etalin hydropower project on the Dibang river in Arunachal Pradesh. The project is being executed by Etalin Hydro-Electric Power Company Limited, a JV of JPL and Hydro Power Development Corporation of Arunachal Pradesh Limited.
- In December 2016, NTPC Limited gave in-principle approval for the replacement of around 11,000 MW of inefficient TPPs that are more than 25 years old. The TPPs are likely to be replaced with supercritical capacity by 2022, which will entail an investment of about Rs 500 billion.
- In September 2017, Adani Power transferred its 4,620 MW Mundra coal-based power plant in Gujarat to its subsidiary Adani Power Mundra Limited. The sale is for a lump sum amount with no specific values assigned to individual assets and liabilities. In a separate development, Adani Enterprises Limited divested its stake in Adani Green Energy Limited (AGEL) to below 50 per cent, as a result of which AGEL ceased to be a subsidiary of Adani Enterprises Limited with effect from June 6, 2017.
- In May 2017, CESC Limited announced its restructuring plan, wherein it will be divided into four companies. The move aimed at unlocking value and ensuring focused management in each of the verticals. The power distribution business will continue to be under CESC Limited, the power generation business will be under CESC Generation, the retail business (Spencer’s) will be carved into a separate company while all other non-power businesses will be covered under CESC Ventures. All these four entities will be listed with effect from October 1, 2017.
- In October 2016, RInfra converted BSES Yamuna Power Limited (BYPL) and BSES Rajdhani Power Limited (BRPL) into its subsidiary companies through share acquisition. Earlier, BYPL and BRPL were associate companies of RInfra. Following the acquisition, the shareholding of RInfra in the two companies has increased from 23 per cent to 51 per cent.