Torrent Power, Gama Infraprop win tender to supply gas-based power

Torrent Power and Gama Infraprop Pvt Ltd have won a tender to supply 1.7 gigawatt (GW) gas-based power during the ‘high-demand’ summer months. The tender was floated by NVVN Ltd, the power-trading arm of state-owned NTPC Ltd.

 

NVVN is the nominated nodal agency for facilitating supply from gas-based power plants (GBPs) from March 25 to October 15, a period identified ‘high-demand’ this year.

 

Torrent will supply 1.3GW electricity from its Sugen Combined Cycle Power Plant and DGEN Mega Power Project at a tariff of ₹4.63 per unit. Gama will supply 0.9GW at ₹4.55 per unit, said industry sources. The tariff is lower than last year when it was ₹5-6.5 per unit.

 

One of the reasons for the reduction in tariff could be the softening of natural gas prices in 2024.

 

Average monthly spot prices at Henry Hub, the most widely-used benchmark for natural gas in North America, averaged $2.21 per million British thermal units (MMBtu) in 2024, the lowest inflation-adjusted average annual price ever reported. This was 16 per cent lower than the average in 2023, and down almost 68 per cent from the 2022 average.

 

The monthly average Henry Hub spot natural gas price in 2024 ranged from $3.25/MMBtu in January to an all-time low of $1.51/MMBtu in March. This reflected a narrower $1.74/MMBtu range of monthly prices across the year than the average range of $2.32/MMBtu in the past five years.

 

Robust US natural gas supply, mild winter temperatures, lower heat demand and relatively full storage levels contributed to these historically-low prices.

 

NVVN has been calling bids from gas-based power generation units for the past two years to procure power as part of a special Union government scheme. The company sells this power in the open market when demand goes up. Torrent Power won the bid to supply 0.9GW at ₹4.9 per unit in 2023 as well.

 

Last year, the power ministry directed GBPs to “mandatorily” run during the summer to meet rising power demand. Gas is a peaking power generation source, which means it can be switched on immediately when demand goes up, unlike coal, which needs days to switch on back, or renewable solar and wind which are not stored at a large enough scale for it to be always available.