Carbon credits fuel small power plants

The promoter of a tiny power plant with poultry waste as fuel, which is due to commence commercial operations in February next year, will be able to achieve 16 per cent return on his investment even though the bulk purchase tariff determined by APTransco is not expected to yield more than 12 per cent.

The value addition in terms of return comes to him in the form of carbon credits as the plant has become eligible to generate carbon credits besides power.

This is just one example of the growing awareness among new entrepreneurs in Andhra about the clean development mechanism (CDM). They can thus register themselves with the United Nation's body on carbon credits, which are traded globally.

According to Nakul Zaveri, manager (business development), Eco Securities, which undertakes CDM project and buys carbon credits, Andhra has a great potential for carbon credits provided the companies in cement, power, distilleries and other sectors opt for CDM.

While 14 projects in Andhra have already got registered under the United Nation's Framework Convention on Climate Change (UNFCCC), the state has a potential for generating 5.14 lakh carbon credits which can bring in a revenue of over Rs 70 crore, he said.

A 3.5-Mw plant being developed by SLT Power promoted by G Vijay Bhaskar Reddy, an engineer by profession, is shown as an example where carbon credits help a non-conventional energy project sustain in the face of an adverse low power tariff.

According to Reddy, the plant, which consumes about 100 tonnes of poultry waste along with 25 percent biomass, is not a very viable proposition even as the APTransco has agreed to enhance the bulk power tariff to Rs 2.99 per unit after a month-long hard bargaining by the promoters' lobby in the non conventional sector.

"With the implementation of CDM, I can generate up to 50,000 certificates a year which help me set off against lower revenues from the sale of power," he said here at a press conference organised by Eco Securities.

Similarly, PSR Green Power Projects Private Limited is setting up a 7.5-Mw project in the neighbouring Mahaboobnagar with CDM, which helps cut emissions, according to its managing director PS Rao.