Gridlock could idle big chunk of 25,000 MW

Written by Noor Mohammad | Noor Mohammad | New Delhi, Bhopal | Updated: Feb 3 2014, 06:53am hrs
GridlockThese plants are being developed by private players that include Jindal Steel, Sterlite Energy, KSK Energy and Visa Power. Reuters
A clutch of power plants coming up in Orissa and Chhattisgarh may have to grossly underutilise their capacities over the next three years, resulting in generation losses in excess of Rs 1 lakh crore for these private sector players, an unfortunate situation in a country starved of electricity.

The plants could be compelled to run at below full capacity because the likely delay in the setting up of the transmission network to wheel the power to open-access consumers in the northern and western regions of the country. The potential surplus power from these plants with a combined capacity of 25,000 MW, and involving investments over Rs 1.25 lakh crore, cant be sold in the two coal-bearing home states due to the lack of demand. The bulk of the power from these plants was meant to be sold outside these states.

These plants are being developed by private players that include Jindal Steel, Sterlite Energy, KSK Energy and Visa Power. The developers have booked 24,000 MW transmission capacity with central transmission utility Power Grid Corporation of India under long-term open access for wheeling power to consumers in the northern and western regions.

Half the planned capacity has already been commissioned but the transmission bottleneck has meant the plants are running at a plant load factor (PLF) of 30-50%, much lower than the 85% normal capacity utilisation. The projected loss in generation, consequently, could be to the tune of 3,720 MW in 2013-14. That translates into a revenue loss of Rs 10,400 crore if the cost of electricity is taken at Rs 4 a unit.

This figure could reach Rs 52,400 crore in FY16 if transmission projects dont take off. The 10 750-kV inter-regional transmission lines connecting Jharsuguda in Orissa with Aurangabad in Maharashtra via Bhopal were expected to be commissioned by end of March but are now likely to slip by one to two years primarily due to issues relating to diversion of forest land.

All companies, except central sector PSUs, are required to provide alternative land for afforestation while acquiring forest land to set up projects.

Alarmed at the prospect of these generation projects becoming unviable due to inter-regional power transmission constraints, the Association of Power Producers ( APP) has written a letter to power secretary PK Sinha, asking for an expeditious resolution to problems hampering the transmission projects.

Banks and financial institutions that funded the power plants could end up taking a hit if these projects are stranded. These generation capacities are in the process of being put up in Orissa and Chhattisgarh by 26 generating companies. Though 50% of the capacity has become operational, despite the availability of coal, the plants are forced to operate at a sub-optimal PLFs primarily due to inter-state transmission bottlenecks. It would be a major loss for the consumers and disastrous for the developers and lenders if these projects remain underutilized due to these bottlenecks,Ashok Khurana, director general, APP, said in the latter sent to the power secretary.

Khurana added: Since identifying land for compensatory afforestation is proving to be a generic and major hindrance impacting most of these inter-state transmission lines being developed, it is requested that the projects may be treated at par with PSU projects for compensatory afforestation like ultra mega power power projects.