The Telangana State Electricity Regulatory Commission (TSERC) has approved power usage agreements (PUAs) between Telangana distribution companies (DISCOMs), and NTPC for the purchase of 1,692 MW of solar power from NTPC’s interstate transmission system (ISTS) connected solar power projects under the Central Public Sector Undertaking (CPSU) Program Phase II.

Background

The Telangana DISCOMs and NTPC had signed the PUAs at usage charges of ₹2.86 (~$0.036)/kWh for 1,296 MW, ₹2.74 (~$0.034)/kWh for 90 MW, and ₹2.69 (~$0.034)/kWh for 306 MW for 25 years.

In light of the growing electricity demand in the state, DISCOMs have been opting for power purchase agreements (PPAs) to ensure 24×7 uninterrupted power supply across categories, including agriculture.

While entering PPAs, the DISCOMs are considering the renewable purchase obligation (RPO) targets applicable at the state and national levels.

Telangana DISCOMs have envisaged 12,000 MW of renewable power under CPSU Program Phase II, which is proposed to be added from FY 2019-20 to FY 2022-23. The PUAs ensure the supply of the agreed energy.

The DISCOMs stated that electricity demand was growing at an average of 8% to 9%. Accordingly, they were planning for both capacity additions and complying with RPO targets.

The DISCOMs substantiated procurement of solar power from NTPC by stating that they had no plans to expand thermal power generation plants but would opt for solar power capacity addition.

They stated that all thermal power plants might be closed after their respective PPA periods, and in the future, battery energy storage systems may cater to the peak demand needs.

Commission Analysis

The Commission agreed with the DISCOMs that they need to procure renewable power on economic principles not only to meet their RPO obligation but also to meet the increase in load growth due to the Lift Irrigation Projects and 24×7 uninterrupted quality power supply.

It also held that the 12,000 MW of renewable power under the CPSU Program Phase II would ensure the minimum supply of renewable power the DISCOMs require.

The Commission noted that Telangana’s highest peak demand of 14,160 MW was recorded in March 2022 compared to 7,000 MW in 2014. The state’s energy requirement was about 65,000 MU but was likely to go up to 88,000 MU by 2025-26. Therefore, the DISCOMs needed to plan for future demands with renewable power while keeping thermal power as the base load stations.

TSERC had recently issued the ‘Renewable Power Purchase Obligation Regulations, 2022,’ setting RPO targets for FY 2023 to FY 2027.

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