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Comments on RInfra's proposal to extend its PPA for Dahanu power station till 2036

Author(s): Prayas (Energy Group) Publication Date: March, 2017

Reliance Infrastructure Limited (Generation) (RInfra-G) and Reliance Infrastructure Limited –Distribution (RInfra-D) have filed a petition before MERC seeking approval for Power Purchase Arrangement (PPA) relating to supply of 500 MW from RInfra-G’s Dahanu Thermal Power Station (DTPS) for the period 23-02-2018 to 15-08-2036.

However, the power sector is in a state of flux and this is particularly true in case of Mumbai. The prices of renewable energy (both wind and solar) are rapidly falling making renewable energy based open access a highly lucrative option. In case of Mumbai, the network rollout plan is yet to be finalized and that will also affect consumer migration. Additionally, issues such as transmission constraints may need some time to be fully resolved. Given all this uncertainty, Prayas (Energy Group) has submitted that signing a cost-plus PPA for such a long duration is not be advisable at this point of time. In stead, Prayas has proposed an interim arrangement which allows RInfra-D to continue the existing cost-plus PPA (which is valid till February 2018) with RInfra-G at the existing tariff decided by the commission, only for the next three years, i.e. till the end of the current MYT period. This would ensure continuity of supply till there is better clarity on the many issues enumerated in the submission.

The submission can be downloaded using the link below. It draws from the analysis report “In the Name of Competition: The annals of ‘cost-plus competition’ in the electricity sector in Mumbai” published by Prayas (Energy Group) in February 2017 and the submission made by Prayas regarding TPC's network rollout plan.

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