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Rediff News  All News  » Business » Companies make a beeline to sell surplus power

Companies make a beeline to sell surplus power

December 11, 2008 11:41 IST

Decline in production activities following ongoing financial crisis may result into a huge power surplus with captive power generators.

Many companies are making beeline to sell their additional powern generated from their captive power plants.

Ahmedabad-based stainless steel manufacturer Shah Alloys, denim maker Arvind Ltd and electric two wheeler producer Electrotherm are currently producing surplus power from their CPPs and they are looking at selling it.

"We have 100 MW captive power plant and our company has recently got permission to sell the surplus power," said Shah Alloys CMD Rajendra Shah said while speaking at seminar 'Selling Surplus Power from Captives and Renewables' organised on Wednesday by Independent Power Producers Association of India at Ahmedabad.

Similarly Electrotherm and Arvind Ltd have a surplus power upto 15 MW and 10 MW respectively.

Recent global meltdown has led to substantial cut in production by many corporate companies.

Among other things, the production cut has resulted into lower power requirement for these companies, which have their own captive power plants.

"The total installed capacity of CPPs in India is around 30,000 MW and majority of this capacity is likely to be surplus with various industries scaling down their operations. The surplus capacity can go to national grid provided that the captive power generators are given 'open access', which is at present a crucial issue for captive power generators.

"Many State governments at present are not providing open access and this hampers the sale of power by companies," said Harry Dhaul, director general, IPPAI.

"CPPs can bridge the one fifth of current power deficit.

The power contribution to national grid by CPPs is likely to grow to 20 per cent by 2011-12, which was 4 per cent in 2004.  In the next five year plan, 1,200 MW is likely to be added by CPPs entailing an investment of $12 billion," said Daanish Verma, senior associate, Ernst & Young.

Special economic zones also have huge captive power generation capacity. The surplus power generated in these SEZs can go for domestic market but there is not clarity at government level as to how this power can be taken outside SEZs," Harry Dhaul added.

BS Reporter in Mumbai/Ahmedabad