NTPC Vidyut Vyapar Nigam Ltd (NVVN), a subsidiary of India’s largest state-owned power generator NTPC Limited, has floated a tender for procurement of 4 gigawatt (GW) electricity from gas-based power (GBP) plants on competitive bidding basis to help the government meet the “crunch period”, projected from April 10 to May 16.
“This is the first time the government has come up with a concept like this. The procured gas-based power, which is usually expensive compared to the cost of electricity from thermal or solar plants, will be sold in the power exchanges by the NVVN. It will preferably be sold in the day-ahead market (DAM) so that there is a moderating effect in the clearing price. If there is any shortfall in realising the cost, NVVN will be supported by the Power System Development Fund (PSDF). The power might also be sold in the recently launched high-price market, but we’ll have to see if that situation arises,” said a senior official requesting anonymity.
Private as well as state-owned gas-based power plants can bid in this tender. Only the centre-owned GBP plants of the NTPC Limited are not included in the tender. This is because the government, in a separate direction, has already asked NTPC Ltd to ramp up power from its GBP plants so as to generate 5,000 megawatt (MW) in order to meet the impending surge in electricity demand. Of about 26,000 MW GBP plants in India, nearly 24,000 MW remain unutilised due to high gas prices.
ALSO READ: Will India face another power crisis this summer?
As per the tender document reviewed by Moneycontrol, the last date for submission of bids is March 23 and bids will be opened on the same day. “NVVN intends to select suitable bidders whose bid shall be opened on March 23 and will be eligible for opening of price bids, followed by reverse auction and bucket filing for issuing letter of Award (LOA) through an open competitive bidding process in accordance with the procedure set out herein. Supply of power from selected GBP plants to Day Ahead Market shall commence not less than 7 days from the date of issue of LoA. To give effect to such supply, the selected GBP plant shall offer the capacity to the nodal agency, which in turn shall offer it on any of the power exchanges, which have successfully operated Day Ahead Market consecutively for last 30 days for each time block,” read the tender document.
Any offer of less than 50 megawatt (MW) by a bidder will result into non- responsiveness of bid, it stated. “Minimum Guaranteed Offtake during the identified crunch period for 4,000 MW (4 GW) capacity shall be 1,209.6 MU as specified in consultation with NLDC (8 hours at 4,000 MW and 1,600 MW for 16 hours per day for 21 days). This shall be applicable to individual selected bidders on proportionate basis. The technical minimum of each bidder for operation of Gas based plants shall be 40 percent,” it said.
ALSO READ: Coal India prepares for the great Indian summer
The government has predicted peak power demand to hit 229 GW in April. But depending on the intensity and length of the heatwave, the same could be even more. In the current financial year, India's electricity demand hit a high of 215 GW in April and several states had to resort to power cuts due to coal shortage at thermal power plants. These measures of ramping up gas-based power offtake is intended to take some load off the heavily depended upon coal-fired power plants in the country. Despite growth in renewable capacity, India still uses about 80 percent of electricity from thermal power sources during peak demand phases.
Last month, NVVN had floated another tender to facilitate supply of 1,500 MW power from Imported Coal Based (ICB) plants with untied capacity to meet the demand between April 10 and May 10 when the availability of power in the day ahead market (DAM) is expected to be less than the demand.
Among other measures to ensure adequate electricity supply in April-May, the government in the last two months has ordered imported coal-based plants to generate to full capacity; mandatory six percent blending of imported at all thermal power plants and transport of domestic coal through rail-ship-rail.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
