Energy: Promote captive power

Jayant Deo, MD & CEO, India Energy Exchange

A greater emphasis on captive generation needs to be given. As per CEA a nominal 19,509 MW of captive power capacity exists. Lowering of state and central taxes would give a boost to captive producers. In addition to this, efficient energy systems such as gas based Combined Heat and Power (CHP), capable of achieving efficiency of up to 85 per cent should be promoted. CHP systems would also help lower the carbon footprint which is in line with NAPCC. The budget should promote the fuel supply including gas and eliminate cascading taxes on power generation and use for at least the next 10 years.
Over the past three years we have seen that while power has been available at IEX at less than Rs 3 per unit, a significant quantum (700 MW to 2,000 MW) could not be cleared as the state utilities preferred to shed load rather than purchase cheap power. For back-up power, consumers use diesel generator (DG) sets, which run on subsidised diesel, to generate power at Rs 13 per unit. This anomaly, where consumers are paying up to Rs 13 per unit for back-up power while there is unsold power at Rs 3- Rs 5 per unit on the exchanges is incomprehensible.

There is considerable generation capacity that is bottled up for want of adequate price. A step towards opening up the market has been taken by the Ministry of Power, which has removed all ambiguity surrounding Open Access. Bulk consumers may prefer bottled up power, which may be cheaper than DG.