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Govt may fund unrealised input cost of gas-based central power PSUs

The power ministry may provide financial support to state-owned gas-based generation companies to make up for unrealised input costs so that they can produce and sell electricity in the peak demand season for grid stability.

“Because gas prices are higher and that is not fully recovered by market-based sale, that gap we will be able to fund from the government or there are some funds available in PSDF,” power secretary Alok Kumar told ET.

The proposal is likely to be discussed this week by concerned stakeholders, another official said, requesting anonymity.

Much of India’s gas-based power generation capacity, which stands at 24,800 MW, is idle because high gas prices have made electricity generated at gas plants generally more expensive than coal, hydro and renewable-based power, making it hard for these plants to find buyers. Now, the government plans to fund unrealised costs when they sell electricity, likely using the Power System Development Fund (PSDF).

The fund from PSDF can be used as a sort of support to gas-based power that may be used to maintain grid stability during peak demand.

“For grid balance, the grid controller puts some reserves, some quantum of power which they use in the case of grid fluctuations,” said the official cited above.

To meet the upcoming peak demand, which is likely to cross 230 GW in April, the government is planning to use increased gas-based electricity apart from ensuring sufficient coal stocks.The critical part of a day in the peak season is the non-solar hours when the maximum pressure is on coal and gas-based generations, Kumar said. Considering a rise in demand, the ministry had on Monday asked coal-based power generation companies to import 6% of their fuel requirements.

The Grid Controller of India has reported that power demand has increased sharply, and it is expected to remain at an increased level during the first half of financial year 2023-24, the power ministry said in a notification on Monday.

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