The Hindu Business Line : Investments in captive power on upswing

THE market for captive power plants is hotting up. Projects worth Rs 15,800 crore for a total capacity of 4,410 MW have been announced since the passage of the Electricity Bill.

To put it in perspective, as per the Ministry of Power estimates, the total captive power capacity in the country in 2001 was about 20,000 MW.

Most projects announced have, however, been in the industrial segment.

Though the Electricity Bill encourages the generation of captive power by non-industrial establishments such as hospitals and co-operatives, only a few such projects have been announced.

These include a 21 MW plant d by All India Institute of Medical Sciences (AIIMS) and a 5 MW plant by the Madras Medial Mission.

Mr R.V. Ramani, Division Head, Cogen Division, Thermax, shares a similar view. He said: "As turnkey contractors, we are receiving enquiries largely from the power and energy intensive industrial sector. Some non-core industries are also putting power plants, but not necessarily on a turnkey basis. Non-industrial segments like hospitals, co-operatives and institutions normally install small capacity sets for emergency applications as before. The general trend for captive power is on an upswing whether turnkey or otherwise".

Thermax has received captive power plant orders worth Rs 200 crore in 2003-04.

Mr Ramani said most orders were received for plants in the 8-36 MW segment.

Mr A.K.Puri, Director (Power), said BHEL received orders worth Rs 2,000 crore in 2003-04.

Interestingly, there has been a surge in the captive plants using non-conventional energy sources such as waste, biomass and bagasse.

Sugar companies such as Balrampur Chini, Bannari Amman Sugars, EID Parry and also a few sugar co-operatives have announced co-generation plants using bagasse as fuel.

The total co-generation capacity announced last fiscal was close to 200 MW.

In contrast, the total installed capacity based on biomass till 2001 was just 260 MW (according to a report on the power sector put out by the Ministry of Power).

But are these capacities being set up to take up trading opportunities as envisaged by the Electricity Bill?

Mr S. Mehra, Vice-President, Market Development Group, Power Trading Corporation (PTC), said PTC had been receiving lot of queries from owners of captive power plants for sourcing and selling power. But there were glitches to be sorted out, he said.

"The rules regarding surcharge and sharing of transmission losses is yet to be framed by the State Electricity Regulatory Commissions. We have received an order from Indal's Kerala unit for sourcing power directly.

But we are not able to source power at rates wanted by them. It is a right step forward. But it will take time for things to fall in place," he said.