The Hindu Business Line : TN clears 4 merchant power plants

Chennai, Sept. 12 The Tamil Nadu Government has approved the setting up of four merchant power plants with a total generating capacity of 6,000 MW. These plants are to come up along the coast – one each at Cuddalore and Nagapattinam, and two near Tuticorin, according to official sources.

According to the sources, the projects that have been approved are – UDI Infrastructure (2,000 MW at Cuddalore), Tridem (2,000 MW, Nagapattinam), Coastal Gen (1,000 MW, Tuticorin) and Free City (1,000 MW, Manappadu near Tuticorin).

Merchant power plants, unlike other power plants that sign power purchase agreements with utilities, compete for customers and absorb the full market risk. Typically, according to the Power Ministry, the risk of a merchant power plant is carried on the balance sheet of the promoter.

Market needs

Merchant power plants cater to different uses in the market – some supply electricity regularly to the grid and some meet peak loads.

They do not have long-term power purchase agreements with a single buyer. Instead, they can commit a certain percentage of their capacity to such agreements and sell the balance generation in the open market to whoever needs the power at that particular time.

With open access of the transmission lines now available and power trading possible, the merchant power plants can sell electricity to registered power traders, who will in turn identify buyers for the power.

The four projects have to go in for competitive bidding for the equipment and fuel supply and their tariffs have to be approved by the Tamil Nadu Electricity Regulatory Commission if they sell power to the Tamil Nadu Electricity Board.

Tariff-based bidding

The Centre recently turned down Tamil Nadu’s request to permit it to go enter into memoranda of understanding with about 15 companies that had proposed projects in the State for nearly 30,000 MW of generating capacity. The Centre wanted the State to follow the tariff-based bidding norm specified by it for large projects.

According to a senior Power Ministry official, it will be difficult for the Centre to accept Tamil Nadu’s request as there will be similar demands from other States. The Centre believes that tariff-based bidding is the way to go forward in adding generation capacity, especially for large projects. Instead, it told the State Government that it could ask these companies to adopt the merchant plant route and set up the projects.

The Union Power Ministry has been trying to encourage merchant power plants across the country as a means to create additional generating capacity.

Merchant power plants up to a capacity of 1,000 MW will be provided coal linkage and captive coal blocks may also be provided to such plants with capacities ranging from 500 MW to 1,000 MW.

More Stories on : Industrial Policy | Power | Tamil Nadu

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Bulgarian PM sees big scope for enhancing ties

Govt agrees to raise retirement age of port & dock workers

TN clears 4 merchant power plants