M D Mundhra_Malana Power

7/21/2019 M D Mundhra_Malana Power

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Merchant / Captive PowerPost Electricity Act 2003

By

Sh. M.D. Mundhra

Malana Power Company Limited

LNJ Bhilwara Group

15th Octoer !""#

C$$ % P&C Con'erence on

(&he Power Mar)et Po*t +lectricity ,ct !""#-

+ntitie* Bu*ine** Model* and $mplication*/.



15th October 2003 2

LN !hilwara "ro#p in Power

LNJ Bhilwara Group i* a 0*. 1"" Cr. di2er*i3edGroup. &he Group ha* oth Capti2e Power Plant* andMerchant Power Plant*.

Capti2e Power Capacity

15 M4 &awa +P in MP % Capti2e 'or +G. 67or Graphite +lectrode8

1# M4 40S in CG 9 Capti2e 'or +G.

67or Spon:e $ron8

!5 M4 Coal a*ed in MP % Capti2e 'or +G.

6;nder de2elopment8 6Graphite +lectrode +<pan*ion8

## M4 DG Set* in 0a= MP 9 Capti2e 'or &e<tile Mill*



15th October 2003 3

LN !hilwara "ro#p $Pioneers o% Merchant Power Plants in &n'ia

Merchant Power Plant*

>? M4 Malana +P % $ndia@* 3r*t and onlyoperatin: Merchant Power Plant.

Completed in record time o' #" month* ,t a co*t o' 0*. #.> Cr*. A M4.

1! M4 ,llain Duhan:an +P ,l*o ein: de2eloped a* a Merchant Power Plant.

+<pected to e on *tream y !""9!""> wellahead o' *chedule.



15th October 2003 (

Merchant Power Plants $ "eneration

+<cept ydro % other mode* o' :eneration delicen*ed. 7or ydro C+, appro2al i* reuired ao2e a certain le2el. 4e *u::e*t thi* limit to e 0*. !5"" Crore* 6'or 5"" M48. &he ,ct ha* increa*ed Scope 'or merchant power plant*

without lon: term PP,.

But allotment o' ydro Pro=ect* in any ca*e i* reuired. ariou* 'orm* o' Competiti2e iddin: a*ed on E0oyalty@

E;p'ront Premium@ E0ate o' Power@ ha2e practically 'ailed. ;n*uitale 'or ydro Pro=ect* a* they are e<tremely ELocation

Speci3c@ and ha2e ydrolo:y and Geolo:y inherent ri*)*.

,* a re*ult now allotment o' ydro Pro=ect* to the Pri2ate*ector i* practically at a *tand*till.



15th October 2003 5

)#**este' proce'#re %orAllot+ent o% ,y'ro Power Pro-ects .1

&ime i* Fey in ydro Power 'or de2eloper *tate andNation. 1 year o' early commi**ionin: o' 1"" M4 ydro Pro=ect mean*

0*. 1! Cr* o' additional 0oyalty 'or *tate 1!H royalty.

&here'ore ECompletion &ime@ *hould e the criteria 'orallotment o' ydro Power Pro=ect* to the pri2ate *ector.

De2eloper* to e *hortli*ted a*ed on their technical3nancial mana:erial capaility and pa*t trac) record.

&hey *hould e :i2en 1 year 'or 2ettin: 7ea*iility 0eport*6'or :ood pro=ect*8 or DP0* 6i' they are a2ailale8.

&hey *hould then Bid 'or E&ime 'or completion o' Pro=ect@.

De2eloper with lowe*t time 'or completion to e awardedthe pro=ect with *et o' incenti2e* A di*incenti2e*.



15th October 2003

)#**este' proce'#re %orAllot+ent o% ,y'ro Power Pro-ects .2

Scheme o' $ncenti2e* and Di*incenti2e*

Pro=ect lea*e period % I" year* 'rom uoted CoD.

$ncenti2e % 5"H royalty wai2er 'or early commi**ionin:.

Di*incenti2e 'or delay % Penalty o' !.5H o' annualde*i:n ener:y 0*. ! per )4h 6*upported y an):uarantee8. ,llow 7orce Ma=eure and 1 year :race period.

State to ta)e o2er 'or delay* ! yr* 'rom a:reedmile*tone*.


http://slidepdf.com/reader/full/m-d-mundhramalana-power 7/1715th October 2003

Merchant Power Plants $ )ellin*Options

Directly to$ndu*trialCon*umer*Su=ect to

payment o'*urchar:e

9 No 0e:ulator@*appro2al reuired.

&o Di*com* wAo*urchar:e %

Need*0e:ulator@*

appro2al

&o &rader* 'or'urther *ale* to

Di*com* orcon*umer*

Merchant Power Plant* 9Sale*



,ow to enco#ra*eirect )ale to &n'#strial Cons#+ers4

$ndal@* Fochi unit :ot clo*ed de*pite oKer o' 0*. !.5" A )4h'rom P&C at Ferala $nter9*tate Point due to e<ce**i2eESurchar:e@ 6I! pai*e8 and intra9*tate wheelin: char:e 6#5pai*e8 and &ran*mi**ion lo**e* char:ed y FS+B.

&here'ore &o promote Direct Sale to $ndu*trial Con*umer*-

Surchar:e mu*t e eliminated within 5 year*. 4ithin the*e 5 yr*. % Surchar:e to e capped at 5"H o' the

diKerence etween- +<i*tin: &ariK &ariK ne:otiated etween con*umer* and :enerator* plu* all

wheelin: char:e*.

;nle** the ao2e i* implemented &hird Party Sale* willnot *ee the ELi:ht o' the day@.

4ithout the ao2e Merchant Power Plant* will edicult propo*ition.



)#rchar*e an' Captive Power Plants

$ndu*trie* ha2e two option* 'or meetin: their reuirement*o' power- &o put capti2e power plant % with no *urchar:e.

&hi* would normally not allow economie* o' *cale. &o uy power 'rom Merchant Power Plant* at mar)et rate*-

But deci*ion to *et up a capti2e power plant or :o in 'or PP, with

Merchant Power Plant will e dicult without )nowin: theamount o' Surchar:e and de3niti2e time 'rame 'or it*elimination and a* a re*ult- $n2e*tment* made in ha*te in capti2e power plant* may :o

wa*te Some *tate* li)e ,P Farnata)a are introducin: ta<e* on

capti2e :eneration. &hi* would 'urther complicate the deci*ion ma)in: proce**.

$n 'act in mo*t countrie* indu*trie* :et power at *u*idiedrate*. So )eepin: *urchar:e will ma)e indu*trie* uncompetiti2e.


http://slidepdf.com/reader/full/m-d-mundhramalana-power 10/1715th October 2003 10

Merchant Power Plant $)ale to isco+s .1

&ariK to e appro2ed y 0e:ulator*.

ariou* Di*cu**ion Paper* oated indicate retainin:the ECo*t9Plu*@ Pricin: *y*tem.

Co*t9 Plu* pricin: reward* ineciency.

&o reward eciency in*tead o' decidin: co*tpro=ect9wi*e we *u::e*t a and o' power price* to

e announced annually y the 0e:ulator*-

Minimum Price to e a*ed on optimum co*tin: in aparticular *ector.



Merchant Power Plant $)ale to isco+s .2

Ma<imum Price to e a*ed on actual co*t o' pro=ect*completed durin: la*t # year*. &hi* *hould include-

0o+ durin: con*truction period 'or power pro=ect*.6Otherwi*e 'or a typical ydel Pro=ect ha2in: ?

year* con*truction period 1? H 0o+ will tran*late to

only H 0O+8.

0e:ulator* appro2al *hould e reuired i' price doe*not 'all in thi* and o' price*.

&he ao2e will increa*e a2ailaility and *u*euentlymar)et 'orce* will ta)e o2er.&hi* will :i2e oo*t toecient entrepreneur* to put up merchant powerplant*.



Merchant Power Plants an' 6ra'in*

Merchant power Plant* will al*o :et a oo*t ypromotion o' &radin:.

7or 'acilitatin: more Player* in the mar)et we *u::e*t- Licen*in: 'ee not :reater than 0*. 1"."" Lac* per annum. Sin:le &radin: licen*e 'or the entire country % &radin:

licen*e* not to e re*tricted to :eo:raphical area*. No &radin: licen*e 'or Generator* a* they are already

'amiliar with nuance* o' Sellin: A &radin: o' Power.

&hi* will allow merchant power plant* to *upply directlyto con*umer* y meetin: their *ea*onal demand* y&radin:.



15th October 2003 13

7n'er s#pply / Over s#pply o% power

Some mechani*m needed to price the o2er *upplyAunder*upply. ,B& in it* pre*ent 'orm % ineKecti2e a* it wa* ori:inally not

meant to e a rate mechani*m ecau*e e2en at mo*tde*irale 7reuency o' 5" rate i* 0*. 1.I A )4h.

&hi* ha* re*ulted in con2er*ion o' *cheduled demand into

un*cheduled demand. Need* re2i*ion to en*ure proper pricin: o' un*cheduled

:eneration A con*umption. 4e propo*e the 'ollowin: rate* 'or un*cheduled power-

Now Su::e*ted ,t 5".5 7reuency- 0*. "."" A )4h 0*. !."" A )4h ,t 5"." 7reuency- 0*. 1.I" A )4h 0*. !.5 A )4h ,t I." 7reuency- 0*. I.!" A )4h 0*. ?."" A )4h

, Chart i* depicted in the 'ollowin: *lide.



15th October 2003 1(

Chart showin* present an's#**este' rates at 'i8erent "ri'

9re:#enciesCurrent Vs. Suggested rates of power at varying grid Frequency levels

0.00

1.40

2.80

4.20

2.00

2.7

4.20

!.00

0.00

1.00

2.00

".00

4.00

.00

!.00

7.00

0. 0 4#. 4#

Frequency levels $%&'

( a t e s o f ) o w e r $ ( s

. * + , - '

Current rate of power $(s.*+,-' Suggested rate of power $(s.*+,-'



15th October 2003 15

Merits o% the propose' +echanis+

&hi* will ma)e an)in: ea*ier. Capti2e Power *tation* can *upply e<ce**

:eneration to the :rid or draw durin: *horta:e*. &hi* un*cheduled interchan:e can e treated a* per

the propo*ed 7reuency a*ed price mechani*m.

&rader* can al*o ene3t 'rom thi* mechani*m 'or*hort'all A o2er*upply o' power.

&hi* will al*o help in continuou* *upply o' powerto con*umer*.

&hey can uy their *cheduled reuirement*throu:h PP,* and 'or additional reuirement*they can u*e thi* mechani*m.



15th October 2003 1

Captive Power $ Other &ss#es

Capti2e Power de3nition i* road and i' 'ollowedcould e a )ey dri2er o' :rowth.

Po**iility o' 2aryin: interpretation y Le:al A0e:ulatory ,uthoritie*.

National +lectricity Policy *hould remo2e all

ami:uitie* in it* interpretation. 5H euity in2e*tment o' a con*umer in a :eneratin:

company *hould entitle him 'or capti2e ene3t. One $PP can e a Capti2e 'or more than one

indu*trial con*umer. $' the ao2e i* implemented thi* could re*ult in

'ruit'ul =oint in2e*tment* in power *ector y $PP* andcon*umer* to ta)e ad2anta:e o' +conomie* o' Scale.



15th October 2003 1

6,AN; <O7

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M D Mundhra_Malana Power