Idle Gas-Based Power Plants Gear Up To Meet Higher Demand
Plants start test runs, following reports that the government may bring them under Section 11 of the Electricity Act 2003.
Gas-based power generators have started test runs at their idle plants, following reports that the government may bring them under Section 11 of the Electricity Act, 2003, mandating their operations to meet the peak power demand. There are close to 20,000 MW gas-based power plants that are lying idle, since there wasn't enough domestic natural gas to operate them and imported gas made them economically unviable.
According to industry experts, few of them have gone into non-working condition, but around 16,000 MW plants connected to the gas grid can still become operative.
"Unlike last year, the spot LNG prices on IGX have shown a declining trend in the past couple of months, which is a good sign for gas-based power plants. The spot LNG prices now range at $9–10 per million metric British thermal unit compared with $12–13 MMBTU last year,” Rajesh Mediratta, managing director and chief executive officer of Indian Gas Exchange Ltd., told NDTV Profit. “These prices may become viable for power plants when average power prices on the power exchanges move above Rs 8/Kwh."
As of April 10, the average market clearing price on the Indian Energy Exchange Ltd. was Rs 4.97 per unit and this is likely to touch the cap price of Rs 10/kWh around elections, as states and the central government will ensure 24x7 power supply, thereby raising demand.
In FY24, around 1,200 MMSCM (15 cargoes) of gas was utilised on spot basis by the power sector, but this number is likely to double on the back of higher power demand. Some power plants like the Andhra Pradesh Power Generation Corp. and Lanco's Kondapalli power plant in Telangana have started test trials at the plants.
These power plants have ordered small quantities of initial gas from GAIL India Ltd. and IGX to keep themselves ready to meet their projected requirements once they are brought under Section 11, according to people close to the development who spoke on the condition of anonymity.
Even NTPC Ltd., which has close to 5,600 MW of gas-based capacity has started test trials, and to meet the exigencies during the crunch period, NTPC Vidyut Vyapar Nigam Ltd. has floated an additional 4,000-MW power purchase tender for the period of March–June. Awardees in the tender were Torrent Power Ltd. (750 MW), Lanco (350 MW) and Gamma Power (90 MW).
According to data available from the National Load Dispatch Centre, production from the gas-based power plants in the first week of April rose to 72 million units from 44 million units in the last week of March. Last fiscal, the generation from gas-based capacities touched 180 MUs in a single day. “If the government imposes Section 11 and power demand rises to 250 GW and above, this generation will rise nearly 1.5 times,” said Rupesh Sankhe, vice-president and power sector analyst at Elara Securities India Pvt.
Power Plants Seek Reduction In Capacity Booking Timeline
The gas-based power plants have also sought intervention of the Ministry of Power and the Power and Natural Gas Regulatory Board to reduce the timeline for capacity booking from three days to one day and make intraday capacity booking possible.
Though GAIL offers companies the security of ordering any capacity anytime in a flexible timeframe, while sourcing from other suppliers, the three-day limit hampers operation of power plants at competitive gas prices.
According to industry people, in case the capacity booking is made available on a shorter notice by pipeline transporters, it may save a huge amount for gas-based capacities as they can source through the Gas Exchange and operate according to the power grid requirement.
