Regulator Approves Purchase of 2.5 GW of Solar Power by Telangana DISCOMs

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Telangana State Electricity Regulatory Commission (TSERC) accorded in-principle approval to Telangana State Distribution Companies (DISCOMs) to procure 2,545 MW of solar power from NTPC, NHPC, and Solar Energy Corporation of India (SECI) at the tariffs approved by the commission.

The regulatory body approved the procurement of 1,045 MW of solar power from NTPC and 500 MW of solar power from NHPC at ₹2.45 (~$0.029)/kWh, and 1,000 MW from SECI at ₹2.37 (~$0.028)/kWh for 700 MW and ₹2.38 (~$0.028)/kWh for 300 MW.


DISCOMs, in their petition, said that they could satisfy the solar renewable purchase obligation (RPO) targets prescribed by TSERC from FY 2018-19 till FY 2021-22 and marginally meet the non-solar RPO targets.

But with the state’s growing demand, DISCOMs would be unable to meet the RPO targets set by TSERC. The present renewable installed capacity tied up by the DISCOMs under power purchase agreements is 8,411.04 MW. The mandated RPO of the DISCOMs is 7.50% for FY 2022-23, 8% for FY 2023-24, 9% for FY 2024-25, 10% for FY 2025-26, and 11% for FY 2026-27.

The DISCOMs claimed that in light of the higher RPO targets set by the TSERC and increasing load growth at 8.9%, the procurement of solar power through the petitioned projects would help them comply with the same.

DISCOMs sought the approval to procure 1,045 MW of solar power from NTPC and 500 MW of solar power from NHPC under Tranche-III of the Phase-II Central Public Sector Undertaking (CPSU) Program; and 1,000 MW of solar power from SECI under Tranche-IX Inter-State Transmission System (ISTS) Program.

DISCOMs, in their petition, said that they had signed the Power Usage Agreements (PUAs) with NTPC at ₹2.45 (~$0.029)/kWh. The PUAs with NHPC at ₹2.45 (~$0.029)/kWh are in process, and the Power Purchase Agreement with SECI was signed at ₹2.37 (~$0.028)/kWh plus a trading margin of ₹0.07 (~$0.00085)/kWh.

NTPC initially offered 1,000 MW at ₹2.45 (~$0.029)/kWh. The total capacity was offered from three 245 MW solar projects at Nokh, Rajasthan, and 265 MW from the NTPC REL project at Khavda Solar park, Gujarat.

Subsequently, NTPC offered the balance 45 MW capacity from the 310 MW NTPC REL project at Khavda Solar Park, Gujarat, to smoothen the accounting and other modalities for power usage. Approval was accorded for procurement of the balance 45 MW; accordingly, the supplemental agreement was signed on May 13, 2022.

DISCOMs agreed to procure 1,000 MW through SECI at a tariff ₹2.37 (~$0.028) for 700 MW and ₹2.38 (~$0.028)/ kWh for 300 MW. Accordingly, power sale agreements dated February 17, 2022, were signed with SECI, and subsequently, the power purchase agreement was signed with SECI.

The petitioner further said that the present solar tariff is cost-effective compared to higher tariffs of various non-solar renewable sources, such as power from refuse-derived fuel-based projects for which the tariff is presently ₹7.84 (~$0.094)/kWh.

Commission Analysis

DISCOMs have computed the load generation balance for Telangana for the ensuing years until FY 2030-31 and are anticipating the energy deficit from FY 2023-24 onwards, which amounted to 87,288 MU.

Considering the variation in load and generation, the commission said that the DISCOMs must plan for additional generation tie-up to maintain the round-the-clock uninterrupted, reliable, and quality power supply to all categories, including the agriculture sector. The proposed procurement of solar power would help DISCOMs mitigate the energy deficit in the coming years and also help in achieving a reduction in the overall purchase cost.

The proposed solar power procurement of 2,545 MW at an average cost of ₹2.45 (~$0.029)/kWh would help DISCOMs reduce the overall power purchase cost as the higher variable cost of thermal generators having a variable cost of more than ₹2.45 (~$0.029)/kWh, could be avoided in merit order dispatch.

Considering all these factors, the commission approved the TSDISCOMs petition to procure a total of 2,545 MW of solar power.

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

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