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Focused Energy Report –
Volume XXXVIII
Monthly Report – September 2015
Energy Desk
GAIL (India) Ltd.
1
Table of Contents
Energy Prices 3 I.
Under-Recoveries on Petroleum Products 3 II.
Country Analysis – Canada 4 III.
A. Energy Mix .............................................................................................................................................................................................. 4
B. SWOT Analysis ...................................................................................................................................................................................... 4
C. Oil and Gas Resources ....................................................................................................................................................................... 5
1. Oil Resources .................................................................................................................................................................................... 5
2. Gas Resources .................................................................................................................................................................................. 5
D. Oil and Gas Infrastructure ................................................................................................................................................................ 5
1. LNG Terminals ................................................................................................................................................................................. 6
Company Analysis- Engie (GDF SUEZ) 7 IV.
A. Presence across World ...................................................................................................................................................................... 7
B. Business Areas ...................................................................................................................................................................................... 7
1. Electricity ............................................................................................................................................................................................ 8
C. Natural Gas ............................................................................................................................................................................................ 8
D. Energy Services ..................................................................................................................................................................................... 8
E. Strategy and objectives ..................................................................................................................................................................... 8
F. Financials - 2014 .................................................................................................................................................................................. 9
The Global Stock Market Crash 10 V.
A. Reasons for Crash ............................................................................................................................................................................. 10
1. Impact on Other Economies ................................................................................................................................................... 10
2. Three factors have Investors on the run ............................................................................................................................. 10
B. Global Trends Worrying Investors ............................................................................................................................................. 10
1. Booming American Stock Market for past 6 Years ........................................................................................................ 11
2. Slowdown in Chinese Economy ............................................................................................................................................. 11
3. European Economy Still Fragile ............................................................................................................................................. 12
Wind & Solar Forecasting & Scheduling Regulations 2015 & Current Rec Market 13 VI.
A. CERC Forecasting and Scheduling Regulations 2015 ........................................................................................................ 13
B. Error Calculation Methodology ................................................................................................................................................... 14
C. REC trade results August-2015 ................................................................................................................................................... 14
1. Analysis of Trading...................................................................................................................................................................... 15
2
Executive Summary
The Focused Energy Report for the month of September 2015 reviews the Energy Prices taking in
consideration the comparison with last month. There’s increase of around 4.4 % in the WTI oil prices, the
prices of natural gas Henry Hub have decreased by 1.1 % and around 3.7% increase is there for crude oil
prices of Brent.
There is slight rise in oil prices after reaching its bottom level of 42- 43 $/bbl roughly. Oil prices picked up
overnight towards the end of month in the wake of data showing a drop in US reserve stockpiles and amid a
recovery on global markets. It is expected that the fall in inventory was most likely an "anomaly" based on a
reduction in imports, meaning reserves could rise again as the industry heads into the autumn, when refinery
maintenance and poor weather typically reduces demand.
The next discussion in the report is about “Canada”. Canada is one of the world's five largest energy
producers and is the principal source of U.S. energy imports. It ranks fifth in dry natural gas production. It is
the fourth-largest exporter of natural gas, behind Russia, Qatar, and Norway. TransCanada operates the
largest network of natural gas pipelines in North America, including 13 major pipeline systems and 42,500
miles of gas pipelines in operation.
An analysis of its Energy Mix, SWOT Analysis, Oil and Gas Resources- Oil Reserves, Gas Reserves,
Infrastructure- Oil Terminals/Ports, LNG Terminals, Gas Pipelines.
In the next section company “ENGIE (GDF SUEZ)” is analysed. ENGIE was previously known as GDF SUEZ.
ENGIE employs 152,900 people worldwide and achieved revenues of €74.7 billion in 2014. The company
operates in eight segments: Energy France; Energy Benelux & Germany; Energy Europe; Energy International;
Global Gas & LNG; Infrastructures; Energy Services; and SUEZ Environment. As an international energy
provider, Engie structures its activities around the three key sectors of electricity, natural gas and energy
services.
The analysis covers its Presence across World, Business Areas, Electricity , Natural Gas, Energy Services,
Strategy and objectives and Financials - 2014
In this section there is a discussion about “The Global Stock Market Crash”. Stock markets around the world
plunged on second last week of August 2015 as a global selloff accelerated on fears about the health of
China's huge economy. The carnage began with an 8.5 percent drop in China's benchmark Shanghai
Composite index. Markets in Japan, South Korea, and Australia followed suit. That sparked selloffs in European
markets and then the United States. The Standard and Poor's index of 500 large US stocks fell by nearly 4
percent on Monday, adding to losses last week.
The analysis covers Reasons for Crash, Impact on Other Economies; three factors have Investors on the run,
Global Trends Worrying Investors, Booming American Stock Market for past 6 Years, Slowdown in Chinese
Economy and European Economy Still Fragile .
In the last section there is a discussion about” Wind & Solar Forecasting & Scheduling Regulations 2015
& Current Rec Market “. To overcome the difficulties related with managing the infirm wind and solar
power, CERC introduced the provisions for wind/solar power forecasting under the Indian Electricity Grid
Code in May 2010. The CERC, on 05th April 2015 proposed new framework for the Forecasting, Scheduling
and imbalance handling of Wind and Solar Energy generating projects at inter-state level, and finalized the
same through notification on 7thAugust, 2015, to make major amendments to the Deviation Settlement
Regulations (DSM) Regulation 2014 and the IEGC Regulation 2010.
The analysis covers CERC Forecasting and Scheduling Regulations 2015, Error Calculation Methodology, REC
trade results August-2015 and Analysis of Trading.
3
ENERGY PRICES I.
WTI Crude Oil ($/barrel) BRENT Crude Oil ($/barrel) Natural Gas ($/mmbtu)
Particulars June 2015 (Final) July 2015 (Estimated)
JCC Crude Oil ($/b) 64.1 63.85
Average International FOB Price & Exchange rate:
UNDER-RECOVERIES ON PETROLEUM PRODUCTS II.
(A) Product-wise Under-recovery of Public Sector Oil Marketing Companies(OMCs):
^w.e.f.19.10.2014, Diesel price has been de-regulated.
*additionally, a subsidy of Rs 0.82/Litre on PDS kerosene
** Cash Subsidy is for Delhi market.
(B) The OMCs have reported the following under recovery during 2013-14 & of 2014-15:
Price on 3rd
Aug. 2015 Price on 1st Sept. 2015 Change % Change
Brent crude oil 52.21 54.15 1.94 3.7%
WTI crude oil 47.12 49.2 2.08 4.4%
Henry Hub Natural Gas 2.72 2.69 -0.03 -1.1%
Particulars Unit 28-Aug-15 Next Pricing Fortnight
for 1st Sep 2015
Crude Oil(Indian Basket)
- In US Dollar
- In Indian Rupees
($/bbl)
(Rs/bbl)
46.88
3097.83
46.03
3024.17
Exchange Rate (Rs/$) 66.08 65.70
Product Unit Under/Over-recovery
(eff. 1stAug. 15)
Cash Subsidy under
DBTL(eff. 1st Aug. 15)
Diesel^ (Rs/Litre) -
PDS Kerosene* (Rs/litre) 14.95
Domestic LPG** (Rs/Cylinder) 167.18
Product 2013-14
(Rs/Crore)
2014-15
(Rs/Crore)
Diesel 62,837 10,935
PDS Kerosene 30,575 24,799
Domestic LPG 46,458 36,580
4
31%
28% 6%
7%
26%
2%
Energy Mix 2014: Canada
Oil
Natural Gas
Coal
Nuclear Energy
Hydroelectric
Renewables
COUNTRY ANALYSIS – CANADA III.
Canada is a country, consisting of ten provinces and three
territories, in the northern part of the continent of North
America. It extends from the Atlantic to the Pacific and
northward into the Arctic Ocean, covering 9.98 million square
kilometres (3.85 million square miles) in total, making it the
world's second-largest country by total area and the fourth-
largest country by land area. Canada's common border with the
United States forms the world's longest land border. Canada is
one of the world's five largest energy producers and is the
principal source of U.S. energy imports.
A. Energy Mix
It can be seen from the energy mix of Canada that it is
highly dependent on oil for its primary energy
contributing 31%. Next is natural gas (28 %), followed by
hydro (26%). Nuclear, coal and renewables has total
contribution of 15%.
B. SWOT Analysis
Strengths
Vast conventional and unconventional resource
potential.
Transparent market with stable operating
environment.
A completely privately owned hydrocarbon sector
welcomes international investment
Opportunities
Hydrocarbon production is poised to rise from new
conventional and unconventional resources both
onshore and offshore
Offshore production remains highly underexplored
and has become more profitable given historically
high oil prices.
Planned liquefied natural gas (LNG) projects
promise to provide gas output to a large Asian
LNG market.
New proposed pipelines will offer additional export
capacity.
Weaknesses
Monetisation of the country's extensive resources
is currently limited by a lack of access to markets
beyond the US
Oil sands production is extremely capital-
intensive and is deemed environmentally
damaging by many potential export partners
LNG export facilities face mounting headwinds
amid more costly project developments and an
adequately supplied Pacific market.
Insufficient pipeline infrastructure creates
production bottlenecks.
Threats
An increasingly energy-independent US could
deprive Canada of its primary energy export
market.
Continued discount to WTI and Brent could worsen
project economics of oil sands developments.
Rising costs of production associated with labour
and materials in recent years has dis-incentivised
further upstream projects.
Regulatory roadblocks on environmental grounds
to necessary pipeline construction and continued
uncertainty over LNG export tax regime could stifle
export potential.
5
C. Oil and Gas Resources
2014 2015 2016f 2017f 2018f
Proven oil reserves, bn bbl 173.2 172.5 172.0 171.5 170.8
Reserves to production ratio (RPR), years 112.4 105.3 100.7 95.2 93.5
Natural gas proven reserves, tcm 1.9 2.0 2.1 2.1 2.1
Natural gas reserves-to-production ratio, years 13.7 15.2 15.9 16.5 17.1
f = BMI forecast. Source: EIA, BMI
1. Oil Resources
According to the EIA, as of
January 2015, Canada had
172.5bn barrels (bn bbl) and
2.03tn cubic metres (tcm) in
proven oil and gas reserves,
respectively. Canada's proven
oil reserves to fall over the next
five years due to a slowdown in
oil sands development relative
to production. This trend will
continue over the course of the
next decade as sustained lower
oil prices deter significant
upstream investment. Canada's
oil sands remain its primary
source of hydrocarbon
production, comprising more
than 97% of the country's total oil reserves. These heavy deposits are found in three areas: Athabasca, Peace
River and Cold Lake in the provinces of Alberta and Saskatchewan.
2. Gas Resources
Despite holding a relatively smaller share of the world's proved natural gas reserves, Canada ranks fifth in dry
natural gas production. It is the fourth-largest exporter of natural gas, behind Russia, Qatar, and Norway.
Although Canada has plans to export liquefied natural gas (LNG), all of Canada's current natural gas exports are
sent to U.S. markets via pipeline. Most of Canada's natural gas reserves are traditional resources in the Western
Canada Sedimentary Basin (WSCB), including those associated with the region's oil fields. Other areas with
significant concentrations of natural gas reserves include offshore fields near the eastern shore of Canada,
principally around Newfoundland and Nova Scotia, the Arctic region, and the Pacific coast.
The Liard Basin, explored by Apache in 2012, indicating potential recoverable natural gas estimates at 1.344tcm.
The Utica Shale in Quebec. The Canadian Society for Unconventional Gas (CSUG) estimates that the total Utica
shale formation - large portions of which lie in Quebec - could hold more than 1.1tcm of gas; The Horton Bluff
Shale in New Brunswick and Nova Scotia. In May 2010, Corridor Resources chief executive Norm Miller told
reporters that the amount of shale gas discovered by the company in New Brunswick (NB) was of a 'magnitude
larger than other shale plays on the continent'.
D. Oil and Gas Infrastructure
Oil Infrastructure
Three companies operate the majority of the export pipelines: Enbridge, Kinder Morgan, and TransCanada. In
total, members of the Canadian Energy Pipeline Association transport 3.3 million bbl/d of oil over 22,000 miles of
pipeline.
6
Gas Infrastructure
TransCanada operates the largest network of natural gas
pipelines in North America, including 13 major pipeline
systems and 42,500 miles of gas pipelines in operation.
Within Canada, TransCanada operates a 25,100-mile
network at a total average volume of 14 Bcf/d50 that
includes the NGTL System, the Canadian Mainline, the
Foothills, and the Trans Quebec and Maritimes that connect
supply in western Canada to the United States. Spectra
Energy operates a 1,800-mile, 2.9 Bcf/d pipeline system
connecting western Canadian gas supply regions with
markets in the United States and Canada.
1. LNG Terminals
Existing Import Terminal
Project : Canaport LNG; Location: Saint John, New
Brunswick
Proposed Export Terminals
Sr. No. Project Location Capacity
1 Douglas Channel LNG Kitimat, British Columbia 0.55 mtpa
2 Kitimat LNG Kitimat, British Columbia Two train of 11 mtpa
3 LNG Canada Kitimat, British Columbia 12 mtpa
4 Pacific Northwest LNG Prince Rupert, British Columbia 12 mtpa
5 Prince Rupert LNG Prince Rupert, British Columbia 14 mtpa
6 Goldboro LNG Guysborough County, Nova Scotia 5 mtpa
7 Woodfibre LNG Squamish, British Columbia to be declared
8 WCC LNG Kitimat or Prince Rupert, British Columbia 15 mtpa
9 Triton LNG Kitimat or Prince Rupert, British Columbia 2.3 mtpa
10 Aurora LNG Prince Rupert, British Columbia 12 mtpa
11 Kitsault Energy Project Kitsault, British Columbia 4-5 mtpa
12 WesPac Marine Terminal Delta, British Columbia 38 mmcf/d
13 Steelhead LNG To be determined, British Columbia 30 mtpa
14 Grassy Point LNG Prince Rupert, British Columbia to be declared
15 Discovery LNG Campbell River, British Columbia 5 mtpa
16 Cedar LNG Kitimat, British Columbia 14.5 mtpa
17 Orca LNG Prince Rupert, British Columbia 4-5 mtpa
7
COMPANY ANALYSIS- ENGIE (GDF SUEZ) IV.
The origins of the Group in the first half of the 19th century were marked by the enormous expansion in
transportation, with the rush to build canals, railroads and tramways. The period between 1946 and 1955 was
dominated by the need for industrial unity in France, which in turn led to the nationalization of Gaz de France.
The discovery of natural gas in 1951 led to nothing less than the transformation of the Group between 1956 and
1967 to become a natural gas transporter, supplier and trader. The 1980s marked the beginning of extensive
internationalization of the Group's business interests, culminating in the merger between SUEZ and Gaz de
France to create a global energy group.
ENGIE was previously known as GDF SUEZ. ENGIE employs 152,900 people worldwide and achieved revenues of
€74.7 billion in 2014. The Group is listed on the Paris and Brussels stock exchanges and is represented in the
main international indices: CAC 40, BEL 20, DJ Euro Stoxx 50, Euronext 100, FTSE Eurotop 100, MSCI Europe and
Euronext Vigeo (World 120, Eurozone 120, Europe 120 and France 20).
A. Presence across World
The company
operates in eight
segments: Energy
France; Energy
Benelux & Germany;
Energy Europe;
Energy International;
Global Gas & LNG;
Infrastructures;
Energy Services; and
SUEZ Environment.
Energy International
has a strong
presence in its
markets with 73.9
GW gross (37.7 GW
net) capacity in
operation and 10.1
GW gross (4 GW net)
capacity of projects
under construction as at 31 December 2014. It operates in 5 regions worldwide: Energy Asia-Pacific (including
Australian Energy), Energy Latin America, Energy South Asia, Middle East and Africa, Energy North America and
Energy UK-Europe.
ENGIE Energy International, the world leader in independent power generation, operates in five regions of the
world and more than 29 countries, with over 12,800 employees, having 73.2 GW of gross installed power
generating capacity in operation and a significant portfolio of projects under development. Its area include
electricity generation and transportation, steam production and distribution, desalinated water production,
natural gas distribution and transportation, LNG import and regasification, electricity and natural gas sales and
trading, energy services for industrial, commercial and institutional customers and distribution companies.
B. Business Areas
As an international energy provider, Engie structures its activities around the three key sectors of electricity,
natural gas and energy services.
8
56.40%
16.50%
14.90%
5.20% 7%
Production Base of Energy Resources 2014
Natural Gas
Renewable Energy
Coal
Nuclear
Other
115.3
GW
58%
39%
3%
Revenues in Services - 2014
Services
Installation
Engineering€ 157 bn
1. Electricity
It is number one independent power producer in
the world and 4th largest electricity producer in
Europe. It has around 115.3 GW of installed
power-production capacity and 10.5 GW of
power production capacity under construction.
It operates as production and supplies both.
ENGIE has 650 plants throughout the world from
energy sources: natural gas, renewable energy
(hydro power, biomass, wind power, solar,
marine energy) and nuclear energy. It is also
active energy trading in the main energy
marketplaces across Europe, in the United States
and in Singapore. In Europe, the Group traded more than 11,000 terawatt-hours of energy in 2014.
C. Natural Gas
It is No.1 natural-gas distribution network in Europe and is No.3 liquefied natural gas portfolio in the world with
over 120 billion m³ of natural gas supplied yearly.
With 346 exploration or production licenses in 17 countries it produced 5.9 billion m³ of natural gas in 2014 and
delivered a combined 120 billion m³ of natural gas. Its fleet of 14 carriers transported 16.4 million metric tons of
LNG. It supplies millions of individual, industrial and tertiary-sector customers in Europe, North America, Latin
America and Thailand. The Group operates the longest distribution network in Europe (196,940 km), through
which it supplied 24 billion m³ of natural gas in 2014, as well as the second-longest transportation network
(32,582 km). It also sells natural gas across Europe, in
North America and in Australia and has developed
combined gas and electricity offers for the retail market
as well as multi-energy and multi-site solutions tailored to
the specific needs of the industrial sector. In France, the
Group supplies natural gas to 9 million homes.
D. Energy Services
It claims to be No.1 supplier of energy-efficiency services
in the world and operates 230 district cooling and heating
networks operated in 12 countries.
It provides services in Feasibility studies, front-end engineering, project management, contracting assistance,
decommissioning services, electrical-installation solutions, air conditioning and refrigeration, information and
communications systems, industrial maintenance. Also in improvement of energy efficiency in buildings and
consumption-rationalizing solutions based on renewable-energy use. Development of interconnected networks
featuring intelligent sensor and smart-meter systems, consumption-monitoring digital technology, remote
operating systems for power-generating facilities, solutions for reducing carbon footprints of buildings.
E. Strategy and objectives
Rising energy needs in countries displaying strong economic growth, coupled with profound changes to the
European energy sector, have pushed ENGIE to accelerate its investment policy in an effort to become a leader in
the transfer to clean energy by focusing its strategy on energy efficiency, renewable energy, and new business.
Become the gold standard energy provider in rapidly growing markets:
9
Build upon strong positions in independent energy production: The Group is consolidating its
leadership in independent energy production in countries experiencing strong growth, and delivering
high capacity facilities, especially in the Middle East and South America.
Continuing to develop the gas value chain: “Upstream” from exploration and production activities,
and “downstream” from infrastructures, the Group’s projects push back the geographical boundaries of
the gas industry.
Building the LNG portfolio: The world’s 3rd largest importer of LNG, the Group aims to become a
global leader by increasing volume, bolstering its presence upstream, and increasing sales to new
markets and segments.
International energy services leadership: As the world’s top supplier of energy efficiency services, the
Group is making targeted acquisitions in air conditioning networks and forming major energy services
partnerships.
To become € 27 to € 30 bn in gross investment over 2014-16.
F. Financials - 2014
In €m P&L
Revenues 74,686
EBITDA 12,138
Income from operating activities 6,574
Net income group share 2,440
- 5,000 10,000 15,000 20,000 25,000 30,000 35,000
France
Belgium
Other EU countries
Other European countries
North America
Asia, Middle East & Oceania
South America
Africa
FY 2014 Financials by Geography
Industrial Capital Employed - €m Revenues - €m
10
THE GLOBAL STOCK MARKET CRASH V.
Stock markets around the world plunged on second last week of August 2015 as a global selloff accelerated on
fears about the health of China's huge economy. The carnage began with an 8.5 percent drop in China's
benchmark Shanghai Composite index. Markets in Japan, South Korea, and Australia followed suit. That sparked
selloffs in European markets and then the United States. The Standard and Poor's index of 500 large US stocks
fell by nearly 4 percent on Monday, adding to losses last week.
A. Reasons for Crash
The proximate cause for all this is a chain of events that began with the surprise devaluation of the Yuan on
August 11 2015. Coupled with its industrial activity is slowing sharply, and by the failure of the Chinese
government to unveil bold new market interventions to prop up equity prices. Worries that China is stumbling
also trashed commodities.
A weakening outlook for Chinese growth, and a slip in China's currency, have combined to put pressure on other
emerging economies—and especially those whose growth model depends on Chinese demand for industrial and
other commodities.
1. Impact on Other Economies
Europe is China's largest trading partner, and the world's second biggest economy is a vital market for big
German companies such as Daimler (DDAIF), Volkswagen (VLKAF) and Siemens (SIEGY). Oil slumped more than
4% to a new six-year low below $39 a barrel. The losses tipped Germany into a bear market -- Frankfurt's DAX
has now fallen more than 20% from its April peak, and its gains for 2015 have been wiped out. Worries that
China is stumbling also trashed commodities. Oil slumped more than 4% to a new six-year low below $39 a
barrel. In Japan, the Nikkei closed down 4.6%. Stocks in India suffered their biggest fall in more than seven years.
The losses went beyond stocks and commodity markets. Many emerging market currencies -- including Russia's
ruble -- tumbled against the U.S. dollar.
2. Three factors have Investors on the run
1. Concerns that China's economy is slowing faster than analysts had anticipated:
Concerns mounted after a key gauge of China's manufacturing activity tumbled to its lowest level in 77 months.
2. Uncertainty over when the U.S. Federal Reserve will raise interest rates for the first time in nearly a decade:
The dollar weakened against other major world currencies such as the euro, British pound and yen, on
speculation that the global market turmoil may push back a U.S. interest rate rise. Many investors and
economists had expected a Fed rate hike in September, something it hasn't done since 2006. But in the Fed's
minutes published last week, committee members sent the market mixed messages. A rate hike would have
increased borrowing costs -- interest on loans -- for companies in emerging markets. It would also make
American debt more attractive to investors, which means they could dump emerging market debt.
3. The effect of exceedingly cheap oil, which slams exporting countries as well as drilling companies:
A year ago, a barrel of oil cost about $100 -- now it's trading near $40. Oil is a lifeline of economic growth for
many developing countries, which are also seeing their currencies lose value because of their economic exposure
to China.
B. Global Trends Worrying Investors
Several of the world's major drivers of economic demand face problems ahead. In the United States, six years of
gains have produced prices that some experts believe are unsustainable. China's economy is slowing down,
which could produce not only economic hardship but also political challenges for the Chinese government. And
11
much of Europe is still struggling to emerge from the last economic downturn; more market turbulence is the
last thing it needs.
1. Booming American Stock Market for past 6 Years
The US stock market has enjoyed a
huge boom over the past six years.
Even after 24th
August ’15 fall, the
Standard and Poor's 500 index is 170
percent above the low point of the
2009 stock market crash, and 20
percent above the previous stock
market peak in 2007. The US stock
market is down about 10 percent from
its highs earlier this summer. That's a
significant drop, but it looks less
significant when you consider the larger
picture.
2. Slowdown in Chinese Economy
For the past 25 years, the Chinese economy has delivered impressive economic growth. Where the US economy
has grown by 2 or 3 percent per year, China has grown by 7 to 10 percent annually. That growth was facilitated
by an export-oriented development strategy that put Chinese people to work making products for international
companies.
The strategy has been successful so far, but it also has inherent limits. There's only so much global demand for
this kind of work, and as China's living standards rise, it will become harder to compete with other low-wage
countries. So to continue growing, China needs to diversify its economy. Chinese companies need to produce
more goods and services for domestic consumption rather than for export. And they need to become better at
designing and marketing new products, rather than just manufacturing them.
Over the last year, there have been growing signs that the Chinese economy is slowing. The official growth rate is
7 percent over the past year, but it's widely suspected that this figure is inflated. Even some Chinese officials
have privately admitted that Chinese economic growth figures are unreliable.
In mid-2014, China's stock market began to boom despite the country's increasingly gloomy economic outlook.
One reason was that the government relaxed regulations designed to prevent ordinary investors from buying
stocks with borrowed money. By early 2015, they became concerned that stocks had become overvalued and
began tapping the brakes, which triggered
the stock market decline that began in June
2015. In July, China took a number of
drastic measures to try to stop the market's
fall. In the process, the government tied its
own prestige more tightly to the stock
market. That made it particularly
embarrassing when stocks began to fall
again last week.
The real danger for the government isn't
just that China will fall into a recession. It's
that a plunging stock market and economic
downturn will shake public confidence in
China's political institutions more generally.
12
The Chinese government has made rapid economic growth a central part of its bargain with the Chinese people.
If that growth falters, it could do real damage to the government's legitimacy.
3. European Economy Still Fragile
Western countries are still suffering an economic hangover from the 2008 financial crisis. Ordinarily, central
banks fight recessions by cutting interest rates. But in both the United States and the Eurozone, short-term
interest rates have already fallen to zero, making these techniques ineffective.
Central banks' other option, known as "quantitative easing," was controversial, and so the Federal Reserve and
the European Central Bank used it sparingly. The result: a sluggish recovery in the United States, and even worse
results in some parts of Europe, where unemployment is still in the double digits. And that economic
sluggishness — and central banks' reluctance to use unconventional techniques to boost the economy — makes
them particularly susceptible to declining exports. The companies listed in American and European stock markets
are disproportionately multinational firms that do a significant amount of business in China.
13
WIND & SOLAR FORECASTING & SCHEDULING REGULATIONS 2015 VI.& CURRENT REC MARKET
To overcome the difficulties related with managing the infirm wind and solar power, the Central Electricity
Regulatory Commission introduced the provisions for wind/solar power forecasting under the Indian Electricity
Grid Code in May 2010. The mechanism was promoted as the Renewable Regulatory Fund (RRF) mechanism. The
mechanism was originally intended to be implemented by January 2011, which got four extensions (Jan’12,
Jul’12, Feb’13, July’13) before it could get even started.
The mechanism finally got implemented from 15th July, 2013 and subsequently got caught under the litigations
as the Wind Associations challenged the decision of CERC to implement such regulations for wind power plants
connected under the intra-state networks. Finally, the commercial settlement related with the mechanism finally
went to temporary suspension mode in Feb’14.
The mechanism also attracted lot of resistance from various stakeholders due to the reasons represented in the
block diagram below.
A. CERC Forecasting and Scheduling Regulations 2015
The CERC, on 05th
April 2015 proposed new framework for the Forecasting, Scheduling and imbalance handling
of Wind and Solar
Energy generating
projects at inter-
state level, and
finalized the same
through
notification on
7th
August, 2015, to
make major
amendments to
the Deviation
Settlement
Regulations (DSM)
Regulation 2014
and the IEGC
Regulation 2010.
The highlights of
the same are
shown aside:
14
B. Error Calculation Methodology
The error calculation methodology used earlier and the proposed one are compared below:
The Penalty mechanism as per the new regulation is as follows:
For single PPA agreements, the fixed rate shall be the PPA rate between the generator and buyer, and in
case of multiple PPA’s, the weighted average shall be taken.
For Open Access transactions for RE, where consumer is not claiming RPO, or in case of captive power,
the fixed rate shall be the APPC rate at the national level.
The existing wind capacity of 23.7 GW, most of which comes under the control area of the state, whereas in case
of solar, approximately 200 MW odd capacity out of 4 GW, comes under the control area of RLDCs. With the
central government thrust on large additions year-on-year, in future, large inter-state projects will come under
purview of the new inter-state forecasting regulation. However, the regulation for accommodating the capacity
connected with the state control area can be expected to be announced soon as the CERC in its closing remarks
of the final regulation has expressed the desire for the same.
It is expected that the Intra-state regulation will come soon, along with the implication of the commercial
settlement. With the implementation of the Inter-state regulation becoming applicable from 1st November 2015,
and possibly, the soon to come Intra-state regulation, it is a huge task at hand for all stakeholders, especially for
those generators for whom forecasting and scheduling will be something new to oblige to, when the new
regulations are implemented. It also calls for more efficient approach in terms of huge data management
schema, automation of operations, forecasting techniques and error handling & response.
C. REC trade results August-2015
August trading session saw a stagnant response from the Non-Solar demand side. However the Solar RECs saw a
huge recovery from rise in demand during trading session. A sum total of 149,209 RECs were redeemed in this
session, compared to 173,223 in July. Demand took a fall of approx. 14 % w.r.t July.
15
1. Analysis of Trading
Non Solar – Clearing ratio in exchange were at 0.92% and 0.75% in IEX and PXIL respectively for Non Solar RECs.
A total of 107,281 RECs were redeemed in this trading session. There was a fall of approx. 30 % in the current
trading session w.r.t to July.
Solar – Clearing ratio stood at 1.52% and 1.86% in IEX and PXIL respectively. Solar RECs rose staggeringly from
17,952 in July to 41,928 this trading session, a rise of 133%. This was good signs for solar, as it has recovered
again from major fall last month.
Note:
The data and information in the report is sourced from websites and documents available in public
domain and doesn’t purport to be official view of government or any organization. Sincere efforts have
been made to present correct data; however, errors and omissions, if any, are regretted and the same may
please be brought to the notice of Energy Desk for necessary corrective action.
Market Month Type Buy Bids (REC) Sell Bids (REC) Cleared
Volume (REC)
Cleared
Price(Rs/REC)
Buy Bids (REC) Sell Bids (REC) Cleared Volume
(REC)
Cleared Price
(Rs/REC)
IEX
August
Solar 26,402 1,744,953 26,402 3,500
Non-Solar 77,236 8,355,780 77,236 1,500
PXIL Solar 15526 835053 15526 3500
Non-Solar 30,045 3986936 30045 1,500
