India is dusting off its idle gas-fired power plants, not because they’re suddenly cheap, but because peak demand in the blistering months of May and June may leave the grid gasping. An adviser to the power ministry said this week the government is weighing a plan to run the costly plants only as seasonal back-up.
Gas has become the ugly duckling of India’s power mix. Once good for 3% of generation in 2020, its share has shriveled to about 1.5% thanks to prices bouncing between $8 and $18 per million British thermal units. Coal—far dirtier but far cheaper—still provides three-quarters of the country’s electricity. Renewables are climbing, but not nearly fast enough to cover demand spikes.
Chairman of the Central Electricity Authority, Ghanshyam Prasad, told an energy summit in New Delhi that a 100-day plan was drawn up earlier this year to ensure gas plants could be fired up if needed. That plan includes contract tweaks to cover start-up costs and blunt the sting of price swings, though no details were given on how subsidies might work in practice.
India has already trimmed its formal grid-connected gas capacity from 25 gigawatts to 20 after years of mothballing left some plants unfit for duty. Of the remainder, roughly 13-14 GW was pressed into service during last year’s peak season.
This year’s softer demand tells a different story. Heavy rains kept air-conditioning loads lower than expected, while an economic slowdown dampened industrial consumption. That left little need to light up the expensive gas turbines.
The bigger question is whether India can afford to keep these plants on standby. Using them only two months of the year may look like a prudent insurance policy, but in a country where coal is king and renewables are the official future, gas continues to occupy an awkward, costly middle ground.
By Julianne Geiger for Oilprice.com
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