TGDISCOMs Seek Approval To Procure 200 MW Solar Power From NLCIL Under CPSU Scheme In Telangana

The Southern Power Distribution Company of Telangana Limited and the Northern Power Distribution Company of Telangana Limited, together known as TGDISCOMs, have filed a petition with the Telangana Electricity Regulatory Commission. They are seeking approval to procure and use 200 MW of solar power from NLC India Limited (NLCIL). This procurement falls under the Central Public Sector Undertaking (CPSU) Scheme Phase-II Tranche-III. The request is made under Sections 63 and 86(1)(b) of the Electricity Act, 2003, and Section 21(4) of the Telangana Electricity Reforms Act, 1998.

TGDISCOMs signed a Power Usage Agreement with NLCIL on August 27, 2024, at a tariff of ₹2.57 per unit. The 200 MW solar power plant is located in Kutch, Gujarat, and is expected to begin commercial operations within 18 months of the agreement, by February 26, 2026. This move is aimed at addressing the growing energy demand in Telangana and helping TGDISCOMs fulfill their Renewable Power Purchase Obligation (RPPO) targets.

The CPSU Scheme was introduced by the Ministry of New and Renewable Energy on March 5, 2019, to promote 12,000 MW of solar PV projects by government producers using domestically manufactured solar cells and modules. The scheme provides Viability Gap Funding (VGF) to bridge the cost gap between domestic and imported components. The Indian Renewable Energy Development Agency Limited (IREDA) is the nodal agency responsible for managing the scheme.

NLCIL was selected as one of the successful bidders under IREDA’s tender for 510 MW solar capacity. TGDISCOMs chose to procure 200 MW out of this at the agreed tariff, considering the state’s rising electricity demand and the need for reliable, affordable, and clean energy. Telangana’s electricity consumption has already crossed 83,000 million units in 2023-24, underlining the urgency for such measures.

TGDISCOMs have already signed power purchase agreements for renewable energy from various sources like biomass, bagasse, small hydro, municipal waste, industrial waste, and wind. However, solar power remains a more cost-effective option compared to other non-solar renewable sources, which often have tariffs above ₹7 per unit.

The petition also refers to recent changes in the Energy Conservation Act, 2001, which was amended in 2022. According to this amendment, the Central Government has the power to set minimum renewable energy consumption targets for designated energy users, including DISCOMs. These targets are to be met either directly or through Renewable Energy Certificates (RECs).

A government notification dated October 20, 2023, mandates a progressive increase in renewable energy consumption, including specific shares from wind, hydro, and distributed renewable sources. Failure to meet these targets may result in penalties. This includes a fixed penalty of ₹10 lakh and an additional penalty based on the oil equivalent of unmet targets, currently estimated at ₹3.72 per unit.

TGDISCOMs argue that purchasing solar power under this scheme is not only necessary to meet legal and policy requirements but is also economically beneficial. Unlike thermal power tariffs, which rise with fuel costs, solar tariffs remain fixed throughout the contract period. This makes it a stable and affordable source of power in the long run.

They now seek approval from the Commission for this power procurement from NLCIL, highlighting the importance of this step in ensuring clean, cost-effective, and uninterrupted electricity supply to Telangana.