The Hindu Business Line : 250 MW surplus captive power may be available for third party sales

Industries facing a slowdown in operations, biomass-based units which had gone out of operation and companies with surplus power are to exploit the opportunity.

R. Balaji

Chennai, Nov. 20 Over 250 MW of power from surplus captive power capacity with large industries and biomass-based units is expected to be available through third party sales in Tamil Nadu.

Industries facing a slow down in operations, biomass-based units which had gone out of operation and companies with surplus power capacities are planning to exploit the revenue opportunity presented by the third party sale of power recently permitted by the Tamil Nadu Electricity Board (TNEB). Power generators are allowed to sell power directly to industrial consumers using TNEB’s transmission infrastructure for a fee.

Those exploring this opportunity include Malco, the Vedanta group company, which is likely to put up a large portion of the power generated from its entire capacity of 75 MW for sale. It has a coal-based captive plant in Mettur, for its aluminium smelter plant. But with the demand down and prices of aluminium on a slide, the company has surplus power from its captive plant.

Some of the other players in the market planning to sell power are Dalmia Cements, which has a total capacity of about 48 MW and hopes to sell about 10 MW power through third party sales.

According to Mr K. Raghu, Chairman, Ind Bharath Group, which operates over 40 MW of biomass power plants and a representative of the biomass power producers, over 105 MW power would now come into play.

These units which sold power to the TNEB at Rs 3.15 a unit found it unviable because power generation cost increased beyond Rs 5.70 with the increasing cost of biomass fuel.

The power plants were either closed or operating at about 10 per cent of their capacity. Now, they could sell power at a viable cost.

Another major chunk would be from the private sector sugar mills which have a 400 MW capacity of bagasse-based cogeneration power.

But with the sugar season starting a large part of it would be needed for captive use.

But some portion of the capacity would come to the market because of lower sugarcane availability as compared with last year. According to industry estimates, the cane area is down to about 5.65 lakh acres for the 2008-09 season, against 6.8 lakh acres last year. This would mean some surplus power during the season.

According to sugar mill representatives, a large player in this area would be Thiru Arooran Sugars and its group company Shree Ambika Sugars which could put about 25 MW of power for sale even during the season. Other large sugar mills are also exploring the option. Particularly during the 2008-09 season, when sugarcane supply is expected to be restricted, third party sale of power would come in beneficial to the sugar mills.

According to coal-based power producers and biomass based units, the power generation cost works out to about Rs 5-6 a unit, the TNEB’s charge for using its transmission facility would be about Rs 2. They would be looking at a rate between these costs and that of furnace oil or diesel power generation which was about Rs 11 a unit.

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