Government plans new scheme to revive gas power plants

09 December 2019

The Indian Government is working on a scheme to salvage 24,000 MW of stressed gas-based power plants, built at an investment of over Rs 1 lakh crore, by importing natural gas and bundling the output with cheaper solar energy.

The power and petroleum ministries are working on the new proposal. The earlier scheme entailing subsidy has been shelved. The proposed new scheme will offer no subsidy and hopes to help operate the power stations at 90% capacity by selling the bundled power.

A senior government official said the earlier proposed e-regasified liquid natural gas scheme (e-RLNG), which involved an e-auction, was successful when there was an electricity shortage in the country. He also said that in the later tranches, the scheme did not garner much interest from the developers.

He said bundling of solar power with an equal amount of gas-based power is expected to result in a lower cost of production than blending domestic and imported gas-based power.

Power Trading Corp of India (PTC India) has been asked to work on the proposal, an official said. The gas is proposed to be imported by GAIL India with concessions and haircuts by central and state governments, power companies and gas transporters to make it affordable.

GAIL has indicated to the power ministry that it can import LNG for about $6 per unit, and deliver it to power plants for $8 a unit, which includes re-gasification, transit, and taxes, sources said. With this, power can be generated at about Rs 4 per unit. The power ministry’s plan is to blend this with the assumed average renewable energy cost of Rs 2.75 per unit, expecting the blended rate will find enough takers among distribution companies under the merit order despatch rule, according to sources.