Experts say price of electricity from the 4,000-MW project will be fivetimes higher than the tariff at other ultra mega power plants
The proposed 4,000-MW ultra mega power project at Cheyyur is financially not viable and would put an upward pressure on electricity tariff. This would also make electricity unaffordable for consumers, says a report.
The report prepared by US-based Institute for Energy Economics and Financial Analysis (IEEFA) for Chennai-based Indian Institute of Public Policy explains that in the first year of its operations, which is 2021, the tariff for consumers would be Rs. 4.9 per unit. On an average, tariff would be Rs. 5.95 per unit over its 40 year life.
“This pricing is five times higher when compared to the tariff at the other ultra mega power plants (UMPPs) and coal-fired power plants,” says Jai Sharda, Managing Partner, Equitorials, a financial analysis firm that studied the economic viability of the Cheyyur plant.
CHENNAI: The proposed 4,000 MW coal-fired power plant in Cheyyur taluk of Kancheepuram district will either be a loss-making proposition or consumers will have to pay higher tariffs, a US-based Institute for Energy Economics and Financial Analysis (IEEFA) said in a report commissioned by the Chennai based think-tank Indian Institute of Public Policy.
The IEEFA report, based on publicly available documentation on the plant, states that the tariff of power generated would be Rs 4.9/unit in the first year of operation (2021) and would level off to Rs 5.95/unit over the plant’s lifetime reaching Rs 8.3/unit in 2036.
“It does not include cost overruns as a result of delays in land acquisition or on-the-ground resistance or increase in international coal prices,” said Jai Sharda, the copartner of Ahmedabad based Equitorials, an Indian financial analysis company that has prepared the financial model for the report.
CHENNAI. 20 May, 2015
Even as Tamil Nadu contends with rising electricity rates, a new report finds that the 4000 MW coal-fired power plant proposed in Cheyyur is not financially viable as it will place an upward pressure on electricity tariffs in the state. The report concludes that “Ongoing and planned grid and transmission improvements, competitive wind and solar prices, the existing pipeline of power projects in Tamil Nadu and greater resource planning have diminished the need for construction of Plant Cheyyur.”