Tamil Nadu - Coimbatore   

Captive power plants or buying power... that’s the question

— Photo: K.Ananthan

Helpful gadget: The furnace oil-run captive power plant at Tirupur.

COIMBATORE: The Coimbatore industry, hit by 40 per cent demand and energy cut coupled with peak hour restrictions, is revisiting some of its old proposals to meet the problem.

The establishment of a coal-based captive power plant is one such proposal, which was originally mooted one and a half years ago.

The industry is also contemplating purchase of power from other States or from private producers in the State.

It is the high cost of power (Rs. 4.20 per unit) that made the Southern India Mills’ Association (SIMA) to formulate a proposal of setting up a 1,000 MW coal-fired captive power plant in two phases.

Going by the SIMA’s calculations at that time, the cost of the power generation from the plant would be less than Rs.3 a unit with the cost of coal in the range of Rs.1,500/tonne to Rs. 2,000 a tonne.

At that time, in Andhra Pradesh, the net tariff was Rs. 3.05 a unit and Rs. 2.25 a unit for new projects.

Subsequently, when the State government issued letters of facilitation for the implementation of 10 merchant power plants, the Association thought of tying up with promoters of these plants rather than establishing its own plant.

It also held discussions with some of them. However, as the international cost of coal shot up, this proposal was not pursued.

Now, with the power availability itself becoming a problem, the SIMA is taking a re-look at some of these proposals, which can be implemented with some modifications.

It is studying the viability of establishing smaller captive power plants (10 MW to 15 MW each) for groups of units.

However, the association chairman K.V. Srinivasan points out that commissioning a captive power plant would take at least three years and the per tonne cost of coal now is Rs.3,800 to Rs.4,000, pushing up the generation cost to Rs.5.60 a unit.

“We are still open to the idea of tying up with individual power producers.” The units are also looking at buying power under the open access facility.

Some of the mills have individually tied up with private power producers to meet their demand.

They are paying Rs.7.50 per unit. The Association has written to the power utilities in Assam, Chattisgarh, Delhi and Himachal Pradesh too as these States have excess power.

It has also written to power trading agencies such as Tata Power and NTPC Vidyut Vyapar Nigam, a subsidiary of NTPC.

It is awaiting their response. “What we need is quality, uninterrupted power at competitive price,” he says.

And, though the initiative is a brainchild of the Association, when it fructifies, any high tension (HT) consumer in the State can be a buyer.

The main problem that the units face while buying power under the open access system is the cost.

The total tariff that they pay includes the distribution and transmission charges, cross subsidy surcharge, additional surcharge and wheeling charges.

The cross-subsidy surcharge of 97.17 paise per unit (if the injection voltage and drawal voltage were 22 kv/11 kv) is on the high side.

The transmission charges will vary with distance. This should be brought down so that the power cost is viable for the industries, Mr Srinivasan argues.

The State should request the Centre to amend the Electricity Act 2003, enabling small and medium scale units to buy power less than one MW under the open access system.

It should also encourage captive power plant projects, he adds.

Meanwhile, the foundries and engineering units here are also looking at buying power from other States.

C.R. Swaminathan, deputy chairman of the Confederation of Indian Industry (Southern Region), says it would take at least a couple of weeks to firm up any plan for jointly buying power under the open access system by the industries here.

The best option would be to go in for a captive power plant of about 300 MW.

This could be used to meet the needs of industries in this region or include those in other parts of the State too.

However, apart from the time taken to commission captive power plants, the location for these projects should be close to coastal areas so that coal transport and handling charges are minimum.

So, the purchase of power from other States or private producers is the immediate option.

“We are seriously considering various options since there are many ifs and buts in these proposals,” he adds.

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