Even as the government is reviving stranded gas-based power plants, significant coal-based capacity is idling simply because states are unwilling to sign long-term power purchase agreements (PPAs).
Data available as of end of March show that coal-based power capacity to the tune of about 15,000 MW is lying unused.
In addition to this, no PPAs have yet been signed for plants, which will come on stream by 2017, with capacity of around 5,000 MW. Reluctance on the part of debt-laden state power distribution companies seems to be the main reason for the low off-take.
Industry officials say that Uttar Pradesh was the last state to sign a PPA in 2014. Rajasthan, which had signed a PPA in 2013, is now looking to scrap a part of that. Andhra Pradesh, Telangana and Kerala are looking to purchase more power, but have not actually signed any agreements.
“Some of the things are in a regulatory haze, people don’t want to take a decision at this point of time,” said Dipesh Dipu, energy expert at Jenissi Management Consultant. He adds that a lack of clarity on the fate of ultra mega power projects (UMPPs) has further held states back from signing PPAs. “Telangana and AP don’t know if they should consider the Krishnapatnam UMPP gone and terminated or if they should wait for longer,” he said.
Out of the 16 proposed UMPPs, only two have actually taken off. Recently, Anil Ambani controlled Reliance Power walked out of a proposed project at Tilaiya in Jharkhand citing delays related to acquisition of land.
Another reason cited by industry executives is that states are looking to meet some additional demand from alternative sources such as solar energy. “This is some kind of an artificial comfort,” said an industry official.
The government is pushing to up India’s solar generating capacity to 100,000 MW by 2022. This has generated interest among domestic and foreign companies including Softbank of Japan and Foxconn of Taiwan, who, in partnership with Bharti Enterprises is looking to invest $20 billion in India’s solar sector.