The Hindu Business Line : Nuclear Power Corpn seeks to diversify into hydropower

NUCLEAR Power Corporation of India Ltd (NPCIL) wants to diversify into hydropower generation. The company sees this as preparation for availability-based tariff (ABT) regime, which is currently not applicable to it.

According to the January 2000 ABT order for power generation stations owned by the Union Government, electricity tariff consists of fixed and variable costs. State electricity boards give priority to cheaper sources of power, when buying electricity — this is known as the merit order dispatch. Power bought from NPCIL is currently an exception to this order.

As most of the company's power plants have high fixed costs, it has begun internal discussions on adding hydropower to its portfolio, said a senior NPCIL official who did not wish to be named. The company hopes to supply peak power through hydro generation, which is much cheaper than nuclear power.

While the company's board has discussed the idea, the Department of Atomic Energy has also been apprised of it, the official said.

According to the official, Nuclear Power Corporation has also studied the option of entering coal-fired generation but decided against it considering the coal procurement problems.

Analysts believe the company may have no other choice but to diversify into cheaper sources of power generation if ABT order is applied to nuclear power. The company will benefit if it can enter into a joint venture with National Hydroelectric Power Corporation to produce hydropower.

It can reduce its average cost of power by combining one of the most expensive powers with the cheapest, said a senior analyst with a brokerage firm.

Although nuclear power has been considered an expensive option, the average capacity of the plants operated by Nuclear Power Corporation has steadily risen from 60 per cent in 1995-96 to 85 per cent in 2001-02. The company is currently working on eight projects at four sites and will generate close to 7,000 MW by 2007-08 — more than double its current capacity.

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