To ensure lower tariffs for consumers, the state government is looking at shutting down its old and antiquated power generating sets, which work at poor operational efficiencies and instead get 1,506 MW of stranded power generation assets from the private sector on track for cheaper electricity.
It is also planning to reduce costs of power supply to industries and units in backward Marathwada and Vidarbha by subsiding transmission charges.
State energy minister Chandrashekhar Bavankule said private-sector producers who had set up power plants but had not signed power purchase agreements (PPAs) were facing the problem of stranded assets due to lack of buyers. "A new project costs around Rs 8 crore per MW and this may even rise to Rs 10 crore in a few years," he noted, adding that instead, they were planning a policy to revive these shut units.
These units were commissioned at lower costs of around Rs 5 crore per MW, which will translate into lower power tariffs. By 2020 to 2025, the state will need another 5,000 MW of power and this stranded capacity will help fill the gap if the electricity is pumped into the grid.
"The Maharashtra State Power Generation Company Limited (MahaGenco) has power generating sets which are around 35 to 40 years old and generate at Rs 4.5 to 5 per unit, when we can procure electricity at Rs 3 per unit from the open market," said Bavankule, adding that these old units could then be used only when there was an urgency.
He said the state was working on a policy and looking at formulas like purchasing these sets or pumping in equity under a PPP model to revive this idle investment. The state will operationalize the model in case of private power producers who wish to avail of the scheme.
Bavankule said they would ensure that these private producers did not form a monopoly and the private producer and MahaGenco will have their directors on the board. The plant will be run by employees from both entities.
According to the state energy department's records, these shut down private power projects have capacity of 1,506 MW and include Abhijit Energy, Nagpur (246 MW), Dhariwal Energy (600 MW) at Tadali in Chandrapur district, Ideal Energy (540 MW) at Umred in Nagpur and Gupta Energy at Chandrapur (120 MW).
A large number of the MahaGenco thermal power sets are old and antiquated and of the 29 units in service, 17 are over 25 years old and of these 17, a total of 11 are aged above 30 years. All these units have an installed capacity of 210 MW each.
Bavankule said that while transmission costs to industries in Vidarbha and Marathwada were low due to the shorter distance from power plants, industries which get low and high tension power supply paid a standard charge as decided by the regulators.
Most of the MahaGenco's units are located in these two regions. However, the industries in these areas pay the same transmission charges as in case of those around Mumbai, where the costs are higher due to the longer distance.
The government is planning to subsidise the transmission charges to these units in Vidarbha and Marathwada by devolving this through the statutory development boards for the regions.
Bavankule said they had set up a committee consisting of the divisional commissioners of Aurangabad and Nagpur, member secretary of the Vidarbha statutory development board and local industries associations to look into this. The committee will examine issues like whether the transmission charges can be reduced, the extent of this reduction, costs and modalities.
By early next year, the MahaGenco will add 3,230 MW capacity, including 250 MW at Parli, 1,980 MW at Koradi and 1,000 MW at Chandrapur. However, the commissioning of the Parli set may be affected because of water shortage, admitted Bavankule. MahaGenco has an installed capacity of 11,237 MW.