power plants: Centre plans to hook up states to idle power plants

The Centre is likely to offer about 8 GW of electricity to states for the medium to long term from projects that are idling as they don’t have coal linkages or purchase tie-ups, said people with knowledge of the matter. The Centre will aggregate demand from states facing power crises and then auction it to these stressed projects through tariff-based bidding.

The auctioned power purchase agreements will have coal earmarked to plants that emerge as the lowest bidders.

“The bids will be an opportunity to states that were caught unprepared to meet power demand surge over the last few months,” a senior government official said. “It will also be an opportunity for idling power plants to become operational and will increase electricity availability.”

Medium-term Contract: 5 Years; Long-term: 15 Years

Commissioned coal-based power projects with a capacity of about 8 GW are languishing for want of contracts with power distribution companies and fuel supply arrangements.

“Many states were scrambling for electricity to meet the power demand in March and April, when there wasn’t much wind and hydro generation. Frantic calls were being made to power generation companies,” the official said.

The medium-term contract is expected to be for five years while the tenure for the long-term ones has been reduced to 15 years from 25 years earlier.

Similar aggregation schemes were tried by the Centre in 2018 and 2019 to help plants that could not get bids from states and ended up stressed. These schemes had limited success.

“The last aggregation scheme received a tepid response from distribution companies, but we now see demand for medium-term and long-term contracts,” the official said.