Centre takes foot off the pedal to cap gas-based power in future electricity mix

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The Centre has decided not to go ahead with any new gas-based power projects owing to high tariffs and the lack of gas availability, senior officials from the Ministry of Power have told Moneycontrol.

The decision is significant, as India has been scaling up electricity generation capacity using all other sources - including renewable energy, hydropower, nuclear, biomass and even coal - to meet an expected peak demand of 335 gigawatts (GW) by 2030. With the latest decision, gas-based power will be the only mode of electricity generation that will not be scaled up by the government.

“It does not make sense for the government to revive or increase gas-based power anymore. The power generated through gas-based stations comes to around Rs 13-14 per unit. At the same time, I am getting electricity through renewable sources at Rs 2.4 per unit. Similarly, we are getting thermal power at around Rs 4 per unit. So, making consumers pay for such costly power is a bit too much, when we have other alternatives available,” said a senior official.

Gas-based power currently accounts for 1.8 per cent of India’s generation mix, while renewable energy has grown to a market share of 15.6 per cent. As of now, in India, coal is the primary source of energy, contributing around 73 percent to the energy mix and 75 percent to India’s electricity generation.

Documents from the Ministry of Power show that as per government’s plans, coal and lignite power plant capacities will be increased to 251.6 GW by 2030 from current 220.5 GW in order to scale up power generation. Solar capacity will also be increased to 293 GW by 2030 from present 100.3 GW, while wind is projected to rise from 48.3 GW to 100 GW. Electricity generation through nuclear capacity is projected to rise from 8.2 GW to 15.48 GW by the end of the decade.

However, gas-based power capacity is set to remain at the current level of 24.82 GW. During an interaction with reporters on February 21, Union Minister for Power, Manohar Lal Khattar had corroborated the data, adding that gas-based power’s role shall remain limited to meeting India’s summer peak demand.

“Gas-based generation is mostly being used for a peaking role as a tool for grid flexibility, rather than for baseload power,” Khattar had said.

The Central Electricity Authority (CEA), under the Ministry of Power, monitors 62 gas-based power stations with a total generation capacity of 24.82 GW. The requirement of gas for these power plants at 90 percent Plant Load Factor (PLF) is 115 million metric standard cubic meters per day (mmscmd). Between April 2022 and January 2023, the total gas available with India’s power sector was only about 16.14 mmscmd, comprising 13.21 units of domestic gas and 2.93 units of imported re-gasified Liquefied Natural Gas (RLNG). Apart from higher costs, the lack of availability of gas too has been cited as a key reason for these stations not being operational.