Discoms make a beeline for cheaper power supplied by NTPC under SCED system

A large number of discoms are making a beeline for the power supplied by NTPC under the SCED system which facilitates supply of cheaper electricity on priority, industry sources said.

Under SCED (Security Constrained Economic Dispatch), implemented over a year ago, power generating companies raise capacity utilisation of more efficient plants or of those units which are located closer to coal mines and thus have lower freight cost.

As a result, the cost of power production goes down, which benefits both the distribution companies (discoms) and end consumers.

The mechanism then pools supply from selected stations on a national-level 'merit order', under which power is first dispatched from lower fuel cost units whenever any state seeks electricity from the central pool.

"A large number of discoms are availing benefit under the SCED system to get cheaper power supplies," a source said.

"Power purchase cost of cash strapped power distribution companies has started to come down under the new SCED programme," the source added.

According to an estimate, discoms are expected to save as much as Rs 2.5 crore per day due to this mechanism that allows states to access cheaper power first.

There are currently 49 thermal power plants as part of the SCED pilot project with a total installed capacity of 56 GW.

All stations of NTPC are contributing to the central pool. This optimisation scheme has a cost saving potential of around Rs 3,000 crore per year if all coal stations of the IPPs (independent power producers) and state generation companies are brought under its ambit.

The arrangement where POSOCO (Power System Operation Corporation) has been given the flexibility to reschedule power from lower fuel cost units first means that even after adding transmission charges, the final tariff is still lower than most of the contracts signed by these entities.

NTPC is best equipped to offer power at lower cost to the central pool since a number of its units have lower fuel costs and have been operational for decades now, which translates into lower fixed cost as well, another source said.

The gross power generation of the the NTPC Group for 2018-19 was 305.90 billion units (BUs) as against 294.27 BUs during the previous year. The average power tariff of the firm was Rs 3.38 per unit in 2018-19.