Gas-based and solar power plants must fire up
The Government has done well to approve a policy mechanism by which gas-based power plants will be able to sigificantly unlock their potential. As much as 14,000 megawatt of power can be tapped from plants that have been lying idle due to paucity of gas. Additionally, power plants with a capacity to generate a total of 9,000 megawatt but presently working at sub-optimal levels due to the shortage of this fuel, will also get a new lease of life. With the new policy, these plants can expect to run at least at a 30 per cent capacity. The new framework will help import gas and use the same for power generation through subsidy grant. The reverse bidding process, which the Government has cleared, will see power plants quote a rate, for which the subsidy will be released through the Power System Development Fund.
This will keep the final power tariff in check and cushion the power generation plants from losses. The gas pooling system which kicks in, means that imported and domestic gas will be pooled together to be thereafter distributed. This is expected to bring down the overall fuel costs. The reverse bidding process is planned to be transparent through e-bidding. It's not just the generation of power that will be impacted in a positive manner. The huge investments that have gone into establishing gas-based power plants will finally have a chance to see returns. According to estimates, more than Rs40,000 crore stands locked in just those power plants that are operating at less than their optimal capacity for want of gas fuel. In all, at least Rs60,000 crore of investment is under threat if the gas-based plants are not revived across the country. Electricity generation as a result of the new measures is expected to reach 79 billion units.
But the story goes beyond the numbers. Power generation has been a laggard for decades, despite many efforts by subsequent Governments to improve the situation. This has directly impacted economic growth and led to large parts of the country having to go without quality or uninterrupted power supply. Both the industrial and the agricultural sectors have suffered as a consequence. Matters became worse in the wake of the coal block allocation scam, given that an overwhelming number of power plants in the country use coal as fuel. Coal allocations have, fortunately, returned on track, but it makes sense for the Government to spread its choice beyond coal. Gas-based plants are relatively more environment-friendly. And, given that gas exploration has still to see its peak in the country, there is enormous potential to tap this natural resource to generate electricity.
Talking of environment-friendliness, solar energy is another area that needs attention. The Government plans to generate an ambitious 100,000 megawatt of solar power by 2022 — by which time it has also targeted power supply to every home in the country — but the progress so far has been dismal. Government figures have put the generation at a mere 750 megawatt for the year 2014-15, as against the targeted 1,100 megawatt. The current solar power capacity is only 3,062 megawatt. Solar power is just one per cent of the present energy mix. Clearly, there is a long road ahead that the Government needs to walk.