Regulatory Commission extends power purchase agreement with NTPC Kayamkulam for three years

The Kerala State Electricity Regulatory Commission has extended, with certain conditions, the power purchase agreement (PPA) between NTPC Ltd and the Kerala State Electricity Board (KSEB) for the Rajiv Gandhi Combined Cycle Power Project (RGCCPP), Kayamkulam, for a three-year period from March 1, 2025.

The commission’s November 9 order came on a petition filed by the KSEB seeking the three-year extension at an annual fixed charge of ₹100 crore payable to NTPC Ltd.

The panel consisting of chairperson T.K. Jose and member B. Pradeep has set a number of conditions for allowing the extension. One, KSEB and NTPC Ltd should jointly explore the feasibility of establishing floating solar projects and a 500MW/2000 MWh BESS at Kayamkulam. Two, The MoU and power purchase agreement (PPA) between the two entities will cease to exist once NTPC Ltd’s allocation of 180 MW to KSEB from its Talcher plant is stopped. Three, KSEB and NTPC Ltd will explore the possibility of converting the Kayamkulam plant to ‘peat gas’” within two years of signing the MoU.

If these conditions are not met, KSEB will be at liberty to terminate the extension without further notice.

The power sector of Keralam has a long relationship with the Kayamkulam NTPC plant, which uses Naphtha as fuel and has a total capacity of 359.58 MW. It was originally established by NTPC Ltd as a dedicated plant for the State.

The original PPA was signed on January 6, 1995, and the plant started commercial operations on March 1, 2000. But due to the excessive hike in Naphtha prices, electricity was only infrequently sourced from the plant since 2002. Nonetheless, the KSEB has had to pay the full fixed cost to NTPC Ltd. During 2002-2011, 50% of the plant capacity was allocated to Tamil Nadu. But this arrangement ended in 2011, and since then KSEB has been remitting the full fixed cost on its own. Meantime, in 2005, the Ministry of Power, allocated 180 MW cheaper power from NTPC’s Talcher-II power station to pool with Kayamkulam power so that the effective tariff became affordable to Keralam. In 2024, the NTPC requested further extension of the PPA for a period of five years from March 1, 2025.

A few days ago, the Kayamkulam NTPC Plant successfully completed a trial run using methanol as fuel. The second set of trials are likely later this month.