They could do this by the simple expedient of not declaring their plant as ready for commercial operation. It has referred in this context to the experience with the private power station Lanco Amarkantak pumping in electricity generated by one of its units into the grid for one full year under the scheme.
Under the grid stabilisation scheme or the ‘UI mechanism', as it is referred to in grid parlance, a power unit can make big profits by injecting electricity into the grid when demand is high and the grid frequency is low.
While the scheduled energy exchanges with the grid are priced under the agreements between the buyer and seller utilities or through the market discovery price on the exchanges, deviations (positive or negative) from the scheduled exchanges which are termed as ‘unscheduled interchange' (UI) are priced at a dynamic price known as the ‘UI Rate'.
The UI rate during real time reflects the system marginal price at that instant, thereby shooting up to well over Rs 10 per unit when the grid frequency is low during peak demand hours, and dipping if frequency is headed upwards.
The CEA has noted that the 300-MW, second unit of the Lanco Amarkantak thermal power station was synchronised on May 1, 2009, achieved full load on June 4, 2009, but was not declared ready for commercial operation by the developer for more than one year and it went on injecting the entire capacity as infirm power (power not committed to a buyer) into the grid under UI mechanism.
"It goes without saying that injection of large quantum of power without a prior schedule is not good for grid stability," the CEA Chairman, Mr Gurdial Singh, wrote to his counterpart in the Central Electricity Regulatory Commission (CERC), Dr Pramod Deo, drawing upon this experience.
Sudden injection of power into the grid sends the grid frequency soaring, putting pressure on grid managers to either get a beneficiary (such as a State Electricity Board) to increase drawal of power or get a power unit to back down generation, failing which the grid can trip.
The CEA missive comes at a time when a big surge in the private sector's contribution to the power capacity addition programme, especially in the form of upcoming merchant projects, is expected.
The CEA has said that unlike power stations having long-term power purchase agreements (PPAs), where there is a built-in incentive to declare commercial operations, this inducement is missing in case of merchant power plants where capacity is not tied up.
The Authority has recommended that every commissioned inter-state generating station should declare its total availability on a day-ahead basis even if it does not have any long-term beneficiary.
During 2009-10, the private sector added 4,287 MW generating capacity and it is likely to contribute another 6,110 MW in the current fiscal.