Emphasising on Covid being a black swan event that skewed the demand-supply scenario in power markets in the last two years, PTC India CMD (Addl Charge) Rajib Kumar Mishra said no one could anticipate it, including India. In an interview to BusinessLine, Mishra assured that India will not be repeating mistakes of the past in terms of anticipating the demand and supply of electricity in the country going ahead. Excerpts:
Solar module developers are facing huge supply challenges and higher costs. Your views?
In our assessment, the fundamental problem is not the availability of solar modules but the price. Before imposition of basic customs duty (BCD) on modules (40 per cent) and cells (25 per cent), developers were always relying on importing modules especially from countries like China and betting on a downward cost curve of modules to be priced sub-20 cents/watt peak. Given that module costs are 65-70 per cent of the overall project cost of a solar project, this led to discovered prices to be in the range of ₹2-2.20/kWh in solar project auctions. However, the imposition of BCD and issuance of approved list of manufacturers and modules (ALMM) guidelines for procurement threw these projections awry.
So, this issue is one of exercising discipline by developers while bidding and quoting prices reflecting costs, develop blended revenue models for selling capacities in the markets (which PTC can facilitate) that could result in higher returns. We believe that integrated PLI scheme of module manufacturing and solar power generation is also a good step in the direction. Looking at hybrid projects with reasonable tariffs is another good way to design projects because then tariffs would justify the current costs of solar modules. This has been borne out by recent tariffs that have been discovered in recent auctions.
Power consumption has been rising in the past two months. How do you see the scenario?
When we had coal stock-related challenges, we were quick to enforce blending and when stocks were found to be adequate, we reverted to the base case. With regard to October and November 2021 situation, I do not believe we (the sector) will repeat any mistakes of the past. We are better at anticipating crisis as they emerge and have the conviction and maturity to act promptly and decisively. Our coal stocks are now adequate and marginal prices are not reflective of the overall market prices. With the introduction of LPS rules, we have now reinstated the procurement power of utilities and therefore, we anticipate an orderly market conduct going forward.
At PTC, monitoring power demand scenarios is a core part of our role as a market aggregator. We must be mindful of the fact that no one was prepared for the demand-supply behaviour of energy markets in a once-in-a-century pandemic like Covid-19. The resumption of activity post relaxation of measures created a unique scenario that we had not faced either. Obviously, commodity inflation reflected in international energy prices like crude, natural gas and coal is bound to have an impact on electricity prices. Coupled with this inflationary trend, geopolitical uncertainties in Europe have added to the uncertainty which again reflects in the prices of commodities.
What is the progress on cross-border power trade?
In FY22, we traded 8,043 million units in our cross-border trade portfolio across Nepal, Bhutan and Bangladesh. Out of this, Nepal and Bhutan trade constituted 7,631 mu. But what is unique is that we are not merely undertaking import of electricity, but exporting to them as well making this a bi-directional trading operation.
In fact, in the January-March 2022 period, for the first time, we helped Bhutan procure electricity from Indian power markets. We see these relationships to deepen going forward. You will see from our recent announcements like the SJVNL MOU and NHPC MOU that we are treating our cross-border power procurement and sale as an integrated portfolio which would cover long-term trades from power projects and short-term trades based on seasonal surpluses.
PTC inked an MoU with a Norwegian energy firm for green hydrogen. Can you elaborate on this?
We want to play a significant role in the green hydrogen value chain. Be it supply of renewable energy to electrolysis projects or aggregating demand in key industries like refineries, fertilisers and steel production based on the 700 commercial and industrial clients that we have worked with, we believe we have a comparative advantage.
The gap that we have in our solution (offering) is on the technology front and with the Greenstat MoU, we intend to plug that. At PTC, we follow a build, borrow, buy framework to look at creating competencies. In the case of green hydrogen technology, particularly electrolyser technology and the value chain involving manufacture, storage and transport of green hydrogen, we intend to follow the “borrow” approach of collaborating with proven, best in class technology providers.