India: Power Engineering India Cuts Power Plant Projects in Bengaluru

Low energy demand and the financial health of state's power company DISCOM forces MAHAGENCO to shut down power projects - solar not affected...

Bengaluru/India – Maharashtra State Power Generation Company (MAHAGENCO) has been forced to shut down four of its thermal power projects in the state due to poor offtake by the state power distribution company (DISCOM), Maharashtra State Electricity Distribution Company (MSEDCL). Shutting down the thermal projects was due to various factors including aging power projects, remote area locations, high coal transportation costs and low demand by the state’s DISCOM. Also, MAHAGENCO has a total generation capacity of about 13,137 MW comprising thermal – 9,700 MW, hydel – 2,585 MW, gas turbine – 672 MW, and solar – 180 MW. The shutting down of its four thermal projects has led to generation falling below 2,000 MW.

“As highlighted in our quarterly reports, low power demand is becoming a major issue all over India, negatively affecting DISCOM revenues,” said CEO, Mercom Capital Group, Raj Prabhu. “As more renewables are installed, the problems will be magnified as energy sources such as solar tend to be more expensive and more prone to be discriminated against, especially when you take into consideration the dire financial health of DISCOMs and their ability to acquire cheaper power from other sources.”

MSEDCL was historically purchasing its power equally from MAHAGENCO, NTPC and private power producers to meet its power demand of 18,000 MW during peak seasons and 13,000 MW in the non-peak seasons. The DISCOM suffers from heavy financial losses and is not part of the Ujwal DISCOM Assurance Yojana (UDAY) program. According to Maharashtra Electricity Regulatory Commission’s (MERC) merit dispatch order, MSEDCL has to buy cheaper power first before purchasing more expensive power. Annual statements indicate MSEDCL purchases 90 per cent of the power from conventional energy sources such as thermal, oil, natural gas and nuclear.

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