Power companies and sector lenders are lobbying with the power ministry to make it mandatory for state electricity boards (SEBs) to source a certain percentage of their electricity from natural gas-generated plants on a par with renewable power. According to them, this is necessary to make investment into gas-based generation viable.
Sources said the proposal was also discussed in a recent meeting of the power ministry?s advisory committee comprising head honchos of private power companies like Anil Ambani (Reliance Power) and Cyrus Mistry (Tata Power) as well as chiefs of leading power sector lenders like Chanda Kochhar (ICICI Bank) and Pratip Chaudhuri (SBI).
Burning of natural gas produces 50% less emissions compared with coal, according to the US Environmental Protection Agency. Because of its low emission level, the fuel is considered a cleaner source of power like electricity generated by renewable plants based on wind, bio-mass and sun radiation.
?Gas is a clean electricity fuel and should be treated at par with renewable power sources,? said Ashok Khurana, director-general, Association of Power Producers ( APP).
Under the renewable purchase obligation (RPO) regulation, SEBs are required to procure a fixed percentage of their electricity requirement (starting from 5% in 2009-10 and increasing by 1% over next ten years) from renewable sources like wind, bio-mass and solar. The RPO is a key component of the National Action Plan on Climate Change and its compliance is mandatory.
There is an option for renewable energy poor states to buy renewable energy certificates (RECs) in lieu of renewable power to comply with the RPO obligation. SEBs are liable to pay penalty in case of failure to comply with the obligation.
If implemented, the proposal could also help salvage about 8,000 MW of gas-based generating capacity facing the risk of being stranded due to the domestic fuel shortage.