Cost of thermal power has gone up by 4.29% between FY20 & FY22: RK Singh

New Delhi: The cost of thermal power for discoms has gone up by 4.29 percent between FY20 and FY22, said Minister for Power and New and Renewable Energy RK Singh on Tuesday. Responding to a question raised in the Upper House of Parliament, Singh shared figures which showed that the weighted Average Rate of Sale of Power (WARSP) reported by gencos for thermal power was Rs 3.96/kWh in FY20 and Rs 3.40/kWh in FY21 before increasing to Rs 4.13/kWh in FY22.

While cost of thermal power rose, hydro power dipped

According to the figures shared by the minister, while the cost of thermal power increased, the cost of hydro power went down by 1.47 percent. Hydro power cost Rs 2.71/kWh in FY20, Rs 2.64/kWh in FY21 and Rs 2.67/kWh in FY22. Nuclear power, on the other hand, fluctuated marginally between Rs 3.14/kWh in FY20, Rs 3.11/kWh in FY21 and Rs 3.16/kWh in FY22.

“The power procurement portfolio of DISCOMs is a judicious mix of long/medium and short term contracts to ensure the security of supply to their consumers at least cost, wherein the Long Term/Medium Term contracts contributes major part. Hence, there may not be major changes in power procurement costs in Long Term/Medium Term PPAs except the variations in price of coal and freight,” said Singh.

Cost of power

Singh said that the government has taken various steps to reduce the cost of power generation and the cost of electricity to consumers. “Power Exchanges have been set up in the country with the objective to ensure fair, neutral, efficient and robust electricity price discovery. Distribution Companies (DISCOMs) can procure power from these Power Exchanges and thus help to reduce power purchase cost of DISCOMs. With the objective of maintaining reasonable prices in Power Exchanges, upper ceiling limits have been introduced vide order dated 21st March, 2023,” said the minister.

“The government in May 2016 allowed flexibility in utilisation of domestic coal by State/Central Generation Companies (GENCOs) amongst their generating stations to reduce the cost of power generation by allocating more coal to their most efficient plants as well as by saving in transportation cost. The states may also transfer their linkage coal to IPPs selected through bidding process and take equivalent power,” the minister added.

“Rationalisation of linkage sources of State/Central Generating Companies (GENCOs) and Independent Power Producers (IPPs) with a view to optimise transportation cost has been allowed. To promote competitive procurement of electricity by distribution licensees, the government issued various guidelines for tariff-based bidding process for procurement of electricity under Section 63 of Electricity Act, 2003. The government has introduced the SHAKTI (Scheme for Harnessing and Allocating Koyala (Coal) Transparently in India)-2017 Scheme to provide coal linkages to the power plants which do not have linkage, thus helping the generators to get cheaper coal and thereby reduction in cost of generation,” said Singh.

“With the objective of lowering the cost of electricity to consumers, National Merit Order Dispatch was made operational since April 2019, for Inter State Generating Stations under which electricity from more efficient/lower cost plant are dispatched first, which optimises the total variable cost of generation pan-India, while meeting technical and grid security constraints. It has resulted in reduction of variable cost on pan-India basis and these benefits are being shared with generators and their beneficiaries, which ultimately reducing the cost of electricity to consumers,” Singh told the House.

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