Tangedco objects to Centre’s proposal to pool older power plants of over 25 years

Proposal will result in a huge irreversible burden in the longer run on the State utility, it says

Tamil Nadu Generation and Distribution Corporation Ltd. (Tangedco) has opposed the Union Power Ministry’s proposal to create a common pool of coal and gas-based power plants from Central power stations which have completed over 25 years of operation and urged it to drop the idea in the interest of all stakeholders.

Last year, the Power Ministry released a concept note on pooling of tariff of 25 years plus thermal/gas generating stations, aimed at ensuring grid balance amid increase in renewable energy. In the note, it pointed out that although higher penetration of renewable energy in the grid enhances energy sustainability, it also impacts grid stability.

It may still be a few years before the electrical grid will have adequate storage capacity. Until adequate storage capacity develops in the grid, the generation load balancing must be carried out in the usual manner through the conventional load following generating stations such as coal and gas thermal plants, it noted. Thus, ensuring continued operation of the plants which have already completed 25 years will be in the interest of the electrical grid, the concept note said.

“The emergence of cheaper renewable energy, especially solar, has attracted attention of everyone. Today, the procurers are scouting for cheaper power and hesitant to enter long term power purchase agreements (PPAs), anticipating further reduction in power prices,” it said. Further, an often-ignored fact is that the volume of power transacted on the exchange is only about 12% of the total energy requirement in the country, the note added.

As per the Ministry’s proposal, common pool of coal and gas-based plants shall be created. When any station completes 25 years, it will be added to the pool. Percentage allocations shall be made to the willing State power distribution companies from the common pool. They will be billed uniform capacity charge based on percentage allocation and total capacity charge of power from the common pool, it said.

The State power distribution companies shall have to enter a PPA for a minimum of period of 5 years from the intended date of start of drawl of power from the common pool, it noted. The Tangedco said the proposals would result in a huge irreversible burden in the longer run on the State utility. It also said the concept note is against the provisions of the Electricity Act and statues and tariff regulations and also against the provisions of the power purchase agreements.