UP govt will re-assess thermal bids in 3-4 mths; see more short-term PPAs: Power Secy

The thermal power sector has been seeing some stress due to competition from solar power and because of solar tariffs coming down to as low as Rs 2.20 to Rs 2.16. Adding to their woes is Uttar Pradesh (UP) government calling off the PPA bids that they had earlier floated for 3000 MegaWatt (MW) of power.

Discussing the above developments, Power Secretary Pradeep Kumar Pujari said the UP government will re-asses the thermal bids in three-four months. The UP government last month has signed the 'power for all'(PFA) document, he said in an interview to CNBC-TV18.

The state government and Department of Power are working on these thermal bids because they do require the power, he said.

It is right that the share of renewable in power generation is going up but we need to have an adequate mix of thermal and renewable energy. “Solar power is intermittent, it is available in daytime,” he added.

According to him, short-term power purchase agreements (PPAs) are taking precedence over long-term PPAs.

He said the government is focusing on creating more power demand.

A: If you take the UP case, they have taken out the bid -- the previous government had taken the bid before the elections and had not signed the power for all (PFA) document and recently last month UP government had signed the PFA document. They have reassessed the demand and I understand that keeping in view the lean season that is coming now, they are reassessing. They have cancelled the earlier bid, but as per our understanding and the information that we got from the state government, UP will reassess the situation and I understand they still require the power so they will go for the bid again maybe in next three to four months.

A: Solar power is intermittent, it is available in the day time. So, obviously you have to have a mix of thermal and solar. So, they will go for the thermal power.

A: Yes. They will reassess based on the PFA document that they have signed recently. If it is positive then state government and department of power are working on that and we expect the bid to come out maybe in three to four months. They do require the power and because the bid was earlier and that time they had indicated to take the power, probably that particular schedule they have now realised that it is not realistic. So, they will go for the bid after reassessing.

A: Not 2-3 percent, if you look at generation, it is increasing about 6.5 percent. Normally what happens is that that it not a bad number, but as a lot of thrust has been given to the renewable, the share of renewable in the power generation is going up gradually. It is expected; that is what is going to happen. So, earlier 6.5-7 percent growth in generation was there that was coming traditionally from the conventional power, 100 percent used to come from the conventional power.

Now, more and more power will come from renewable in the day time. So, if you look at 6.5 percent, about 2 percent is coming now from the renewable, so, that is stress on the conventional power. Growth is there but maybe the growth is not as much as it used to be because part of it would be coming from the renewable.

A: When you talk about the PPA, we always traditionally have been taking about the long-term PPAs of 5 years. If you look at, there is a deep portal available on power which basically provides bidding for short-term, short-term is seven days to one year. Now on that basis, if you look at last one year, about 58,000 megawatt has been bid out. So now once the new coal policy comes, also will allow the medium-term bid to come out.

Obviously, people are generally not going for those traditional long-term PPA of 25 years because of various developments that have taken place, and the various sources of power that is available in the market in the short-term, there is a mix so they want to minimize their cost also.

A: If you look at the number recently, yesterday’s number or day before yesterday’s number was Rs 3.15 per unit. It will keep changing but definitely, it will go higher. It is not going to go down.

A: The whole effort of government is to basically create demand. Now two or three things are happening. One is that there is a lot of talk about the efficiency, so the industrial sector is basically they are going for energy efficiency and we are also focusing on energy efficiency. Two, the government is for example, thinking of introducing electric vehicles as a measure to create demand for electricity.

So, a lot of thinking is going but then ultimately it all boils down to the general economic growth and GDP and how much electricity is consumed by the industrial sector who is predominantly is a large consumer. Also, the government has already pushed village electrification and I think we will be focusing on the household electrification, a large number of households don’t have electricity access so that itself will add demand for electricity. These are the various measures which government is following to push the demand.