Telangana Regulator Approves 200 MW Solar Power Deal With NLCIL Under CPSU Scheme

The Telangana Electricity Regulatory Commission received a petition from the two power distribution companies of Telangana—Southern Power Distribution Company (TGSPDCL) and Northern Power Distribution Company (TGNPDCL)—seeking approval for the procurement of 200 MW of solar power from NLC India Ltd. (NLCIL) under the Central Public Sector Undertaking (CPSU) Scheme Phase-II, Tranche-III. This initiative is in line with national goals to increase renewable energy use and reduce carbon emissions under the Paris Agreement. The CPSU Scheme supports setting up solar projects using domestically manufactured solar cells and modules, with a subsidy in the form of Viability Gap Funding (VGF).

The proposed tariff is ₹2.57 per kWh, revised from ₹2.45 per kWh due to an increase in GST rates on solar equipment. Some stakeholders raised objections, pointing out that this revised tariff is higher than prices discovered in competitive bidding. However, the DISCOMs argued that the use of domestic components, exemption from trading margins, and a relatively high-capacity utilization factor (CUF) of 28.69% justify the rate.

The petitioners argued that the procurement is necessary to meet rising energy demand in Telangana, which is forecast to grow significantly in the next decade. They cited projected energy shortfalls from 2028 onwards, despite current surplus estimates, emphasizing the need to secure stable and cost-effective energy sources for future reliability. They also pointed to national and state mandates that require DISCOMs to meet Renewable Power Purchase Obligations (RPPO), which are expected to rise every year.

One stakeholder criticized the decision to procure power from a plant located in Gujarat instead of setting it up in Telangana, which could have reduced interstate transmission costs. The Commission responded by noting that CUF is generally higher in states like Gujarat due to better solar irradiance, and land costs are lower. Additionally, the plant in question has already received approvals and started development, making a relocation impractical.

The issue of inter-state transmission system (ISTS) charges was also discussed. Initially, the project was expected to benefit from a waiver on ISTS charges, but under the revised timelines, a 25% charge will now apply. Stakeholders expressed concern about the financial impact of these charges, which could increase the total cost of power delivered to Telangana.

Despite these concerns, the Commission concluded that the procurement was reasonable, considering the need to meet increasing power demand and fulfill renewable energy targets. It approved the proposal but directed the DISCOMs to seek prior approval in the future before entering into such agreements.

The Commission gave its consent to the procurement of 200 MW of solar power from NLCIL, emphasizing the importance of reliable and affordable power while also complying with renewable energy obligations.