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Dark future ahead? 11,000mw thermal power capacity lying idle, largest outage is in the north

Some 11,000 MW of thermal power capacity in the country is lying idle because electricity distribution companies are not drawing the quantum agreed, preferring to source it from the spot market, where power is cheaper. 

Separately, 14,000 MW of gas based power station capacity has been shut due to lack of the fuel. According to data provided by regional load despatch centres, the largest outage is in the north, where some 8,400 MW of thermal power capacity is unutilised because demand has dried up. All these plants have power purchase agreements with state distribution companies, which prefer not to buy their electricity. 

The generation companies affected are a mix of central public sector utilities such as NTPC and Damodar Valley Corporation and utilities owned by state governments. The reduced offtake has led to the shutdown of 840 MW of capacity at Guru Gobind Singh Thermal Power Station in Punjab, 750 MW at Suratgarh in Rajasthan, and 660 MW at Jhajjar Thermal Power Station in Haryana. According to a senior power official, prices at power­trading exchanges have declined about 25 per cent over the past three quarters and have fallen further because of lack of demand.

In December, of some 5 billion units of power offered for sale, only about 3 billion units were sold. Utilities now find it cheaper to buy power from the exchanges, even after paying generators the fixed component of their power purchase agreements, the official said. Such long­term supply contracts have a variable cost that is paid only when power is bought and a fixed part that is paid irrespective of whether electricity is consumed. Cheap power is supplied mostly by independent power producers, primarily those that have not signed supply agreements with state distribution companies. They produce power when demand spikes and idle their plants when demand falls.

Source:Economic Times