ULTRA MEGA POWER PROJECTS
THE COST CALCULUS
In 2005-06, the Centre introduced ultra mega power plants (UMPPs) to
develop projects of 4,000 Mw each, at coal pit heads and coastal
locations. The aim was to deliver power at competitive prices by
achieving economies of scale. Though these projects were estimated to
cost ~20,000 cr each (~5 crore for every Mw capacity) the four UMPPs
awarded so far have not gone as planned. Here is a look at how the
cost estimates have panned out without any correlation to tariff:
Company
Project
Sasan PowerLtd,
RPower
Madhya Pradesh (commissioned)
Coastal GujaratPowerLtd,
Tata Power
Mundra, Gujarat(commissioned)
Coastal Andhra PowerLtd,
RPower
Krishnapatnam, Andhra Pradesh
Jharkhand Integrated PowerLtd,
RPower
Tilaiya, Jharkhand**
Levellised
Cost*
tariff
(~cr) (~/kwhr)
27,000
1.19
18,000
2.26
17,500
2.33
36,000
1.77
*According to company statements and website; **RPower had announced
termination of power purchase agreements for the project
HOW RATES WORK OUT
Power rates constitute a capacity charge, to recover the fixed cost of
plants, and energy charge for fuel. The non-escalable component in
capacity charge constitutes land, equipment and construction cost.
The escalable portion — constituting operation and maintenance
costs, with the major portion being manpower cost — is calculated in
accordance with a formula approved by the Central Electricity
Regulatory Commission. The escalable component in energy charge
for pit head plants includes cost of machinery, other parts and
explosives used in mining coal. For imported coal-based UMPPs,
escalable fuel charge is the cost of imported coal on FOB basis, while
transportation and fuel handling charge constitutes shipping and
handling equipment cost. The non-escalable transportation and
handling charge constitutes infrastructure such as port created to
receive coal
PPA PRICE
(in ~ per kilowatt hour/unit)
Capacity charge
Energy charge#
Pit head NonNonUMPPs escalable Escalable indexed Indexed
SASAN
1st year 0.121
0.001 0.575 0.001
26th year 0.169
0.001
1.43 0.001
TILAIYA
1st year 0.510
0.170 0.377 0.091
26th year 0.406
0.170 0.395 0.091
# Quoted in power purchase agreement
PPA PRICE
Capacity charge
Imported
Noncoal-based escalable Escalable
UMPPs
(~/kwh) (~/kwh)
MUNDRA
1st year
0.872
0.033
26th year
0.516
0.033
KRISHNAPATNAM
1st year
0.700
0.182
26th year
0.625
0.182
Note: PPA is power purchase agreement
Nonescalable
fuel
($/kwhr)
Energy charge
NonNonEscalable
escalable
Escalable
escalable
fuel transportation transportation fuel handling
($/kwhr)
($/kwhr)
($/kwhr)
(~/kwh)
0.00705
0.00723
0.00585
0.00585
0.00285
0.00291
0.00109
0.00109
0.042
0.088
0.046
0.046
0.01820
0.03898
0.0000
0.0000
0.0000
0.0000
0.0000
0,0000
0.000
0.000
0.034
0.034
Escalable
fuel
handling
(~/kwh)
Source: Power Finance Corporation