In the power business, industry and captive capacities are not yet in the mainstream.
PTC India, having succeeded in almost every front of the power market, is now targeting ‘Group Captives' — a concept that allows large industries to come together and set up power plants.
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Growth prospects
PTC is now targeting ‘Group Captives' in a big way. It is encouraging large industries to generate power 24x7 under the group captive concept to meet their own requirements as well as generate to sell.
(The concepts require the consumers to hold together 26 per cent equity in the project and consume 51 per cent of the power generated).
Fuel and coal linkages in the domestic market are fast becoming critical.
Thus, PTC intends to arrange for fuel linkages on a long-term basis with suitable tie-ups with overseas mining agencies for power projects being set up in the coastal regions of India based on imported coal and enhance our endeavour to promote power tolling as a vital area of activity.
Renewable energy
The company recognises the fact that fossil fuel-based generation is under pressure due to climatic changes. Thus, we are making efforts to bring into our fold more renewable and energy-efficient projects.
This area of business we see as becoming very significant in the next few years.
Under current conditions, PTC will endeavour to maintain its leadership position in the short-term trading market, expand operations on the power exchange front, andaggressively pursue competitive bidding and avail itself of opportunities in cross-border projects.
Trading market
The short-term power market has grown at a fast pace. New products have come into the market and pricing has shifted from cost-based to market-based.
Private players have also started seeing value in the sector and are playing a vital role in generation and trading of electricity.
Today, the share of bilateral trading hovers around 5-6 per cent of total generation in the country, while that of the exchange is around 2 per cent. As Unscheduled Interchange (UI) gets reduced, we can reach the figure of 10 per cent in a short time.
Public sector role
The power trading business today is highly competitive. There are more than 40 inter-State trading licensees — most of them are private entities such Reliance, Tata, GMR, Adani, Lanco and others.
PTC, a Government of India initiative and leading market player, is a public limited company listed on both the exchanges. Among the central public sector undertakings, NTPC Vidyut Vyapar Nigam Ltd is the only major trading licensee.
On the buyers' side, barring a few private distribution licensees such as Delhi and Orissa discoms, much of the trading business takes place with distribution utilities which are mostly State-owned.
Policy uncertainties
It is essential that regulatory commissions or policymakers operate in a framework that empowers trading licensees to take business decisions commensurate with risks and rewards. But such a framework should not leave scope for uncertainties which may affect returns on investment or have a negative impact on the confidence of investors in the sector.
Regulatory interventions should only be in case of market abuse; market forces should otherwise be given a free hand.
Price caps and margin caps prescribed by regulators are not very encouraging and distort price signals based on interplay of demand and supply.
While it is important to safeguard the interests of customers, it is equally important to motivate investors to infuse funds into the sector.