Moody’s Investors Service on Thursday (10.10.2019) cut its forecast for India’s FY20 GDP growth by 40 bps to 5.8%, in what reflected a continuing trend of such downward revisions by prominent domestic and foreign agencies.
In its latest bimonthly monetary policy statement last Friday, the Reserve Bank of India cut its growth projection for the domestic economy by a sharp 80 bps to 6.1%, citing that the slump in real GDP growth to 5% in the first quarter of FY20 has been followed by “generally weaker high frequency indicators for the second quarter”.
The latest estimate by Moody’s is the lowest FY20 GDP growth forecast for India, the drivers of the deceleration are multiple, mainly domestic and in part long-lasting. IMF is expected to release their revised growth forecasts for the world and countries including
India next week. The current IMF projection for India is 7% and that of World Bank, last reviewed in June, is 7.5%.
Moody’s attributed the deceleration to an investment-led slowdown that has broadened into consumption, driven by financial stress among rural households and weak job creation. The rating agency expected India’s GDP growth to pick up to 6.6% in FY21 and to around 7% over the medium term.
Moody’s wrote, although we expect a moderate pick-up in real GDP growth and inflation in the next two years, we have revised down our projections for both. Compared with two years ago, the probability of sustained real GDP growth at or above 8% has significantly diminished. Moody’s expected headline consumer price inflation (CPI) to pick up from its recent lows to about 3.7% y-o-y by the end of March 2020 and 4.5% by the end of March 2021, due to a gradual rise in food prices and RBI policy that remains relatively accommodative.
Poor market sentiment and expectations of commercial mining have led to a tepid response for the blocks on offer during the current round of coal auctions. These mines are being auctioned under the 8, 9 and 10 round of bids simultaneously being conducted by the Ministry of Coal.
A top Coal Ministry official reported media, in all 45 bids were received for the blocks on offer. An adequate number of bids have been received for just 6 out of the 27 blocks on offer in the auctions. Another six blocks have received interest for allocation to State or Central government entities. In total, 12 of the 42 blocks envisaged to be auctioned or allocated in this round are now in the fray.
These blocks that did not get a response will be put up for auction or allocation in the next rounds, the official added. In September this year, media reported that potential bidders for the next round of coal auctions had expressed concern over the lower number of coal mines being put up for auction in the Eastern part of the country.
At a meeting called by the Coal Ministry of the stakeholders, prospective bidders had pointed out that the end-use industries are in the East, but a majority of the blocks on offer are in the Western part, especially Maharashtra. A participant in the meeting Coal had said that this is a deterrent and may hamper the viability of the auctions as the coal transport costs will go up significantly for steel, power and other such large industry players that win these far away blocks.
The Indian rupee appreciated by 20 paise to 70.87 against the US dollar in early trade on Thursday (10.10.2019), as easing crude prices and optimism regarding US-China trade talks strengthened investor sentiments. On Wednesday, rupee had settled at 71.07 against the US dollar.
In an interview was sponsored by GE Power, with the rising share of renewable energy,questions are being raised regarding the future of coal-based power plants. KevinCogo, who leads GE Steam Power’s rotating equipment product line globally and Prashant Jain, managing director, GE Power India, tell FE’s Anupam Chatterjee whythe world’s largest original equipment manufacturer feels that this is the best time toupgrade thermal power plants to integrate intermittent renewable energy smoothly inthe grid.
In view on the rise of renewable energy in the country’s energy, Mr Jain said that Roughly thermal power generates much more electricity as compared with its share inthe installed capacity. Hence, it is becoming more significant today. With 175 GW of renewable energy coming in the grid by 2023, when demand is expected to be around 1,500 billion units (BU), it would need about 1,200 BU from thermal, up from 900 BUright now. This means we need more thermal capacity to generate electricity to complement and support renewables.
About the public perception being allegedly against thermal power, Mr Jain said people should be made more aware about the dynamics of the sector. It is important thatpeople talk about this in a more balanced way. Adding renewables is of course the rightthing to do for setting a green future. The government has also taken the right steps by triggering the flue gas desulfuriser (FGD) demand, to make existing coal power plants greener. Some plants probably will not be able to match the new emission norms within the timeline and such capacities would be replaced with brownfield plants. When werecruit new talent, we often come across this question. This is what I tell them: what wedo is valuable, 200 GW on the grid will at least continue for ten years. Plus, it is veryimportant to put in the new technology in the existing plants to make them more efficient and flexible.
Mr Cogo said that Renewables being installed call for more flexibility and efficiency of steam turbines. This is where we are currently putting more of our investments.Addressing this market because we have the capacity to build integrated power plants.To provide flexibility to the grid, we produce a ‘synchronous condenser’ which we make in our Sanand plant. With renewables, you have a lot of frequency fluctuations in the grid which can be addressed by this condenser.
In view of the favour of thermal power producers vis-a-vis renewables Mr Jain said Thermal plants will have to go online and offline much faster with the advent of renewable energy. We have a great technology for ramp rates. For a typical 500 MW plant, the ramp rate is around 5 MW per minute. Our technology can triple this rate,helping plants to ramp up and down much faster. We also offer technology to alter the technical minimum capacities at which power plants operate. These two technologies are required to make the plant more flexible to allow more renewable integration.
In view of the Indian coal quality Mr Jain said in the country, power plants actually do not receive the quality of coal according to which they were initially designed. Even in the stock yards, various qualities of coal get mixed up. This opens up tremendous potential for optimising the systems. We have the ‘digital boiler optimisation’ solution which can help customers manage the uncertainty of coal quality. This can regulate the combustion levels of the boilers based on the quality of coal that is being used and also helps in reducing Nox emissions by a large extent. Our boiler technology is adapted tothe Indian coal with high ash content. We have a good relations with BHEL where we provide the technology for the boilers.
Mr Cogo said that this is something we do everywhere in the world. Our service business delivers equipment parts to customers for their outages. Keep upgrading ourown machines and those of our competitors. Currently upgrading the Chinese fleet with latest technology which is increasing their efficiency. Since the last four to five years,we are building stronger partnerships with larger EPC companies. We have a very strong relationship with Chinese EPCs. For example, Adani Power’s Godda is one ofthe projects we are doing with Sepco3, a Chinese EPC.
The Union ministry of power is gearing up for another set of reforms to improve theavailability and quality of power. The two-day state power ministers’ conference thisweek will see the Centre telling states to expedite supply reforms, renewable capacityaddition and improve energy efficiency standards. As the Centre passes the baton tothe states to take forward the reforms, payment delay by power distribution companies(discoms), resulting in over dues to power generators, is a major cause of worry.
At the same time, several states are reviewing or cancelling power purchaseagreements (PPAs) with renewable power projects. In its agenda note, the Centre hasissued an advisory, asking states not to reopen power purchase agreements. “PPAsshould not be re-negotiated and the provisions under the PPAs should be enforced inletter and spirit. There should also be timely payment to generators (solar/wind power)by discoms on a first-in first-out (FIFO) basis.
States are also expected to ensure rigorous monitoring and review along with qualitychecks, said the Agenda note.
Aggressive implementation of KUSUM scheme for solar-run irrigation pumps
Expediting solar power projects with better land policies
Timely payment to power generators, penalty on default
Completion and closure of all power infrastructure schemes by 2020
Promotion of hydropower and pump storage projects
Discoms to comply with the mandatory provisions of Energy Conservation Act,2001
The Ministry of new and renewable energy (MNRE) clarified on Wednesday(9.10.2019) that the deadline for installing 175 giga-watt (GW) of renewable energy isDecember 31, 2022. At places the date for achieving the stated target is mentioneddifferently, by the year 2022 or by FY22, the clarification stated.
Rising finance costs, government-mandated tariff caps in reverse auctions andcancellation of renewable project tenders, the pace of adding renewable generationcapacities already slowed down in FY19, when the country added 8.6 GW against 11.3GW and 11.8 GW added in FY17 and FY18, respectively. The installed renewablecapacity now stands at 81.3 GW.
The renewable energy industry is one of the major FDI earners with the sectorattracting $4.8 billion foreign capital since FY15. Prime Minister NarendraModi announced in the United Nations General Assembly that the country aims to have450 GW renewable energy capacity. However, experts cautioned that recent instancesof curtailment of solar and wind power in Andhra Pradesh and Uttar Pradesh can throwa spanner in the country’s ambitious plans.