Tangedco to buy power from exchanges at over ₹17,000 crore for the next five years

Tangedco will buy power from the exchanges for its short-term needs in the next five years (2022-23 to 2026-27) at a total purchase cost of over ₹17,000 crore, according to the tariff petition approved by the Tamil Nadu Electricity Regulatory Commission (TNERC) recently.

The State distribution company has proposed to buy power from the short-term market/power exchanges when there is not sufficient power available from the long-term sources.

The Government of India alluded to the imminent growth of the short-term market in the draft National Electricity Policy document issued in 2021. Several measures have been taken to achieve such objectives and a key among them is the resolution on introduction of long-duration contracts at the power exchanges, according to the petition.

The cost of power purchase from the power exchange varies from ₹5.00 a unit to ₹12.00 a unit. The cost per unit has also gone up to ₹20, and it was capped at ₹12.00 by the Central Electricity Regulatory Commission (CERC) recently. Therefore, there is no declining trend of rates in power exchanges, as per the approved tariff petition.

For 2022-23, in compliance with the approval given by TNERC, Tangedco plans to buy 7,208.70 million units from the power exchanges. It plans to buy 6,535.17 million units in 2023-24, 6,130.70 million units in 2024-25, 4,810.76 million units in 2025-26 and 2,265.43 million units in 2026-27.

For 2021-22, as per the annual performance review based on the provisional data approved by TNERC, Tangedco has bought 8,977.35 million units at a cost of ₹5,727.23 crore.

Electricity Minister V. Senthilbalaji recently said Tamil Nadu’s average power demand stands at 17,000 MW a day, while its own generation capacity is only 7,175 MW. The State’s power demand is estimated to touch 65,000 MW in the next 10 years and the efforts are being made to create 20,000 MW of power generation capacity, he said. He also pointed out that there was the capability to produce 32,000 MW, which should be fully utilised to meet 50% of the estimated demand.