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).
According to Mercom’s sources at MAHAGENCO,
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. Sources further confirmed that 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 Raj Prabhu, CEO of Mercom Capital Group. “As more renewables
are installed, the problems will be magnified as energy sources like 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 percent of the
power from conventional energy sources like thermal, oil, natural gas and
Due to the DISCOM buying cheaper
conventional power from NTPC and private players, MAHAGENCO has had to shut
down its power projects with higher costs of production, like its thermal
projects in the remote areas of Marathwada, Bhusawal and Parli, which have high
costs of production as a result of location and coal transportation costs.
These aging projects were built by MAHAGENCO for a purely social cause and are
not financially viable with power costing Rs.0.50/kWh higher than what is sold
by NTPC. However, power produced from other sources like hydel, gas turbine and
solar are not affected.
According to Mercom’s India Solar Project Tracker, cumulative solar installations in the
state is 389 MW to date and the RPO for financial year 2016-17 is 11 percent, one
percent of which is solar. The state also has 972 MW of solar projects under
construction with another 50 MW pending auctions.