Pilot project to cut power production cost will run till May
The government’s pilot scheme to reduce power generation cost, which saved about Rs 2.75 crore per day in the April-December 2019 period, has been allowed to run till May 31, 2020. The pilot scheme, Security Constrained Economic Despatch (SCED), currently involves 52 coal-based power plants with a cumulative capacity of 58,060 MW, and their tariffs are decided on the ‘cost-plus’ basis (no competitive bidding) by the CERC. While most participating plants in the pilot belong to state-run NTPC, few private power units such as Reliance Power’s Sasan unit and Tata Power’s Mundra station are also part of it.
The pilot scheme reduced fuel costs by Rs 845 crore in April–December 2019. Though the weighted average variable cost comes to Rs 1.89/unit, the lowest cost can be Rs 1.12/unit and the highest can go up to Rs 8.15/unit. The total power generating cost in this period was about Rs 54,000 crore. Cost savings made from this process are to be shared between discoms and generation companies.
