Energy Minister Saurabh Patel on Thursday ruled out the possibilities of gas-based power plants succeeding in Gujarat in the long run due to the pricing formula in the power sector. Patel said that the pricing of renewable energy sources, like solar and wind, was very low and gas-based power plants cannot match their falling prices.
Patel was speaking at Adani Institute of Infrastructure after inaugurating a day-long summit on “Gujarat, a gas-based economy: how Indian states can learn from it?”.
Patel spoke about the efforts initiated by the Gujarat government in having a gas-grid in the state and providing piped gas to all districts — except six — in the state as well as providing gas to households in 1,000 villages.
He also added that a total of around 17 lakh gas connections were given by the state government, covering over 1 crore population of the state.
However, Patel ruled out any future of gas-based power generation in Gujarat due to the existing price structure of power sector and the emergence of renewable energy sources, like solar and wind.
He explained the price mechanism of gas-based power generation while adding that it becomes very high and comes last in the merit order. “We have to purchase power according to the price which is available on that day…So, looking at the prices in renewable (energy sector), like solar and wind, I don’t think gas would find place in power sector… even in the long run,” said Patel.
He also stated that the prices of gas-based power generation depends on crude oil and in comparison to that the prices of solar energy have come down so significantly that “no one can match that”.
“There is no way any of the new power projects, coal-based or gas-based, can match the prices of solar…,” Patel said, adding that Gujarat had huge plans for solar energy in the coming days.
“I think with small adjustments, solar can be used on a massive scale in Gujarat…I am confident that in the next three or four years, huge capacities will come up in the state…never heard of before…,” Patel said.
He added, “So, gas and power won’t match…even the existing ones are finding it difficult…right now, certain contracts are there…even private players have entered into contracts for generation in Gujarat…but in the long run, I don’t think they will be able to compete with any fuel…and they will be always last in the line as far as merit order is concerned…”
Gujarat, the gas and Regasified Liquefied Natural Gas (RLNG) supply hub for central, northern and southern states of India, holds a special significance in developing the gas-based infrastructure.
The aim of the summit was to understand the competence of Gujarat to derive 25 per cent of its energy from the natural gas against the share of 6.5 per cent on pan-India basis and how other Indian states can learn from it to enhance the share of gas consumption in energy.
Addressing the summit, Patel said that the state government had spent about Rs 16,000 crore on gas-based infrastructure without any support of Central government when Congress-led UPA government was in power at the relevant time.