After the pilot scheme to procure electricity from 2,500 MW capacity without power purchase agreements (PPAs) evoked a lukewarm response from the industry, the Union power ministry has floated the second round of a similar tender where it has sweetened a few bid conditions to attract more independent power plants.
PFC Consulting, a subsidiary of the Power Finance Corporation (PFC), will conduct the competitive bidding where untied power units quoting the lowest tariffs would sign three-year (mid-term) PPAs.
Unlike the pilot scheme, which was launched in April 2018, the tariff structure for the PPAs would be split into fixed and variable costs, allowing power producers to be compensated for a rise in fuel prices during the contract period. Experts had pointed out that power producers were not encouraged to participate in the pilot scheme, with only 1.4 GW long-term PPAs being signed in the last four years, mainly because the bid conditions did not allow any tariff escalations even with the rise in fuel costs.
The pricing of electricity from unutilised capacities has also been de-linked from spot power prices in the new proposal.
Even as nearly 20,000 MW of commissioned power generating units are under stress due to lack of PPAs, only seven power plants with a combined capacity of 1,900 MW had agreed to sell electricity under the earlier tranche of the scheme. RKM Powergen had quoted the lowest bid of `4.24/unit, which all the remaining power companies agreed to match.
Power plants, which signed PPAs in the earlier scheme, were the units of IL&FS Energy (550 MW), RKM Powergen (550 MW), SKS Power (300 MW), MB Power (175 MW), Jindal India Thermal Power (175 MW), Avantha Jhabua Power (100 MW) and JP Nigrie (100 MW).
