States have evinced interest in the government’s latest pilot scheme to procure 2,500 MW electricity from plants without power purchase agreements (PPAs). A senior PFC official told FE that interest for more than the offered capacity has already been shown by the states and auctions are set to be held in early July. PFC Consulting is the nodal agency for the scheme. It will conduct the auction and PTC India will sign three-year (mid-term) PPAs with successful bidders and and contract with power distribution companies (discoms) to sell electricity.
The development should bring some relief to the thermal power sector, where more than 15.6 gigawatt (GW) of operational coal-based power plants have been classified as stressed assets due to the absence of PPAs. A tepid rise in growth in power demand over the last few years, coupled with rampant capacity addition, has resulted in power plants running at low-utilisation rates. However, the scheme draws more takers, with the Central Electricity Authority reporting that there was a more than 10% annual increase in electricity demand in Uttar Pradesh, Chhattisgarh, Telangana, Arunachal Pradesh, Manipur and Tripura in FY18.
As reported first by FE in early April, the pilot plan proposes that a single entity, which quotes or matches the lowest bid in the auction, would be allocated a maximum capacity of 600 MW. A company cannot quote part capacity from different power stations in the same bid. If PTC procures power less than 55% of contracted capacity in a month, the plant would be paid compensation, the quantum of which would be linked to spot power prices at the Indian Energy Exchange.