The minister says that while demand for natural gas would continue to rise in the state, it would not find a place in power sector because of pricing
In a state that takes pride in calling itself the country's gas hub, the admission that gas-based power plants do not have a great future may come as a surprise, but this is exactly what state's energy minister Saurabh Patel said on Thursday.
The minister said that while demand for natural gas would continue to rise in the state, it would not find a place in power sector because of pricing. "Gas price is based on crude oil. And looking at the current price, it does not fit into the power sector because cost of power generation turns out to be very high, and it doesn't figure in the merit order," Patel said at 'Gujarat – A Gas Based Economy', an annual conference.
Talking with reporters on the sidelines of the conference, former Planning Commission member Kirit Parikh also said that large gas-based power generation capacities are lying idle because of unavailability or high price of gas.
The state government had said in the assembly recently that it was paying more than Rs900 crore per month as fixed cost to power producers as per power purchase agreements signed with them.
"Right now, certain contracts are there. Private players have entered into contracts for power generation with Gujarat. But in the long run, I don't think they will be able to compete with any fuel," Patel said. Patel further said that this would be particularly true looking at the downward trend seen in renewable energy prices.
"We have recently contracted 500 MW solar power at Rs2.90 per unit. We expect renewable power price to remain between Rs2.75 and Rs3.25 per unit. It is not possible for any power project, whether it is coal-based or gas-based, to match this price," he stressed.
The minister also said that the state has huge potential for solar power, and huge power generation capacities would come up in the state over the next three to four years.
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 "Saurabh Patel")
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