Pilot project to reduce power production cost to continue till March

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Updated: September 29, 2021 8:39 AM

The Central Electricity Regulatory Commission (CERC) has allowed the Power System Operation Corporation (Posoco), the national load despatch centre, to extend the implementation period of the scheme.

ElectricityThree new recently commissioned generating units — Nabinagar 660 MW, Tanda-2 660 MW and Darlipali 800 MW — have been incorporated in the SCED pilot.

The government’s pilot scheme to reduce power generation cost, which saved about Rs 1.02 crore per day in the January-August 2021 period, has been allowed to run till March 2022. The pilot scheme — known as the Security Constrained Economic Despatch (SCED) system — currently involves 47 coal-based power plants with a cumulative capacity of 55,670 MW. The SCED system helps in lowering the cost of electricity generation by scheduling more power from plants with lower generation cost.

The Central Electricity Regulatory Commission (CERC) has allowed the Power System Operation Corporation (Posoco), the national load despatch centre, to extend the implementation period of the scheme. Including the latest one, the electricity regulator has allowed five extensions to the SCED system since it started in April, 2019.

Three new recently commissioned generating units — Nabinagar 660 MW, Tanda-2 660 MW and Darlipali 800 MW — have been incorporated in the SCED pilot. On the other hand, NTPC Lara 1,600 MW withdrew temporarily from SCED from February due to technical reasons and NTPC Simhadri Stage-21,000 MW also withdrew temporarily from SCED in April citing planned overhauling.

The scheme was put to action after the power ministry in August 2018 had allowed power generation firms to supply less expensive power from their preferred plants to discoms, even if power purchase agreements (PPAs) are linked to other (more expensive) plants. By removing the PPA hurdle, generators are allowed to supply power from plants where fuel costs (variable cost) are lower. While placing requisition for electricity, each discom generally follows a ‘merit-order’ (plant with lowest variable-cost gets top priority) from its own portfolio of contracts, leading to the under-utilisation of cheaper power stations. The SCED system aims to address this is

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