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Bundle gas-based power with thermal in round-the-clock scheme, industry body tells PMO

Venkatesh Ganesh Mumbai | Updated on July 03, 2020

The Association of Power Producers (APP) has written to the PMO seeking bundling of gas-based power along with thermal, for supply of round-the-clock (RTC) power.

Currently, the Ministry of New and Renewable Energy does not consider energy from gas for its RTC power scheme. In the letter, the APP has reasoned that gas-based power is a superior choice as balancing power. “Technically, gas has many advantages when compared with coal, when used for balancing RE power. This is due to faster ramping rates, low technical minimum level of operation and high part load efficiencies,” said APP.

In a scenario with high RE mix, gas-based power will be strongly suited to provide the required RE balancing needs due to these advantages, it added.

Currently, renewable energy has intermittency issues and hence, to meet large-scale power requirements, the government has sought to blend renewables with thermal power.

The APP represents power companies like Tata Power, GMR, JSW and Adani, among others.

Another reasoning for bringing gas power into the mix is the large available scare capacity and revive idle assets. “About ₹50,000-crore worth investments and 25 GW in gas plants are lying idle. Hence, the spare capacity can be used to provide balancing power without any additional capex requirement, stated APP.

Also, it gives opportunity to revive stranded capacity in a sector which already has capital invested, a bulk of it coming from domestic lending institutions.

Further, factoring in current gas prices, the cost of power generated from the gas plant is equivalent to that of imported coal and with increasing share of renewable energy globally, and hence gas prices are expected to be low. Even compared to other balancing alternatives like batteries being considered by the SECI to increase reliability of RE, gas is a cheaper alternative, noted the APP.

The MNRE had recently stated in its draft on bundling that it is important to have a single thermal source to supply the bundled power as coal and gas have difference escalation index. The Central Electricity Regulatory Commission notifies companies on various escalation rates for the purpose of bid evaluation and payment.

Hydro power

Along with gas-based power, the APP has views on that implementation of certain decisions taken by the government with respect to gas and hydro power plants in India.

Earlier, the government had declared large hydro power (above 25 MW projects) as renewable energy sources that were eligible for various incentives like financial assistance and cheaper credit. With the government’s decision, hydro projects above 25 MW can also avail the benefits of bundling. “It is important that the policy decisions and recommendations already made for revival of gas and hydro power plants are operationalised at the earliest so that intended benefits can accrue from the investments already made in these plants,” noted the APP.

The hydro power industry has been clamouring for long-tenure financing, with softer loan terms, easing of CERC/SERC norms to reflect reduction in tariff in initial years, all of which would help in unlocking benefits of hydro power.

Published on July 03, 2020

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