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Railways to trade power to get low rates for off-peak usage

According to reports, to get the benefit of lower electricity charges for running trains at night, Indian Railways plans to get into power trading.

Trains chugging through the night between 10 p.m. to 6 a.m. consume about forty per cent of total electricity used by the Railways, according to estimates. During this time window, many State Electricity Boards sell power at discounted rates to industries and factories as there is lower demand.

But Indian Railways is unable to avail the lower tariffs in the off-peak hours, as Electricity Boards do not offer such tariffs to Railways. State Electricity Boards do not offer these rates as Railways require reliable and good quality power supply.

The Railways now plan to get into power trading, which will allow them to buy cheaper, surplus power available in the grid during off-peak hours through power exchanges. “Railways is a bulk consumer with almost uniform demand throughout the day. We can get the benefit of surplus power available with other power generators during off peak hours to begin with,” explained Rajeev Mehrotra, Chairman and Managing Director, RITES. RITES is a Railway public sector company with 51 per cent stake in Railway Energy Management Company (REMC), the company formed to manage the power trading job. REMC, in which Railways has the remaining 49 per cent stake, is expected to become operational within the next two-three months. REMC has tied up with the state-owned Power Trading Corporation for handholding initially.

REMC can also get into long-term bilateral deals with firms with surplus power available in off-peak hours. Initially, Railways will buy power, though over the next few years when Railways’ captive power plant start functioning, it can sell power as well.

This can be done in States with open access, where bulk consumers are allowed to buy electricity directly from the open market. To start with, Railways will start power trading in three States — Haryana, Punjab and Gujarat.

“We have to identify the exact train sections in the States. After adopting such energy management practices across the network, we hope to save about 10 per cent of our traction bill,” Kulbhushan, Member-Electrical, Railway Board, told Business Line.

Indian Railways has about 400 traction sub-stations, of which, the pilot project will involve about 10 sub-stations. The Railways consume 14.5 billion units of electricity in a year and have an annual electric traction bill of Rs 8,400 crore. Additionally, Railways spend Rs 1,500 crore for electricity bill for non-traction purposes, such as lighting at stations, depots, etc.

The move comes in the backdrop of increasing electricity prices, with more hikes likely over the next few years. In fiscal 2012-13, Railways paid an average price of almost Rs 6 a unit of electricity used, up ten per cent against Rs 5.3 a unit in the previous year.

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