According to the Ministry of Power’s data, as of May 31, 2023, the nation’s installed power generation capacity stands at an impressive 4,17,668 Megawatt (MW). This includes central (24%), state (25.3%), and the major share occupied by the private sector (50.7%).
While the nationwide power generation scenario appears promising, there is a pressing need to bolster state-owned power generation capacities, as many state-owned discoms continue to incur substantial losses. The Tamil Nadu Generation and Distribution Corporation (Tangedco) is no exception, facing continuous financial losses due to the gap between average revenue realization and the average cost of supply.
The revenue gap, which stood at Rs 634.91 crore in 2018-19, escalated to Rs 863.41 crore in 2022-23. One of the main reasons for this situation is the utility’s failure to enhance its own power generation capacity post 2014, when the North Chennai Stage-II thermal power station with a 600 MW capacity was commissioned. Consequently, Tangedco relies heavily on long-term power purchase agreements with private companies.
Currently, the power utility procures 4,187.50 MW of power from various private entities at the rate of Rs 4.91 per unit. Additionally, during windy season, Tangedco purchases wind power from private windmills. Furthermore, the utility resorts to buying electricity at higher rates from the exchange market to meet the increased demand during summer.
In comparison, renewable energy sources like hydro, wind, and solar, offer cost-effective alternatives to thermal power generation. To capitalise on this potential, Minister V Senthil Balaji, after the DMK assumed power in 2021, promised to establish solar parks in every district using the DBOOT (Design, Build, Own, Operate, and Transfer) model. Such initiatives will reduce the need for private power purchases, enabling Tangedco to install its own windmills and generate power at lower costs. To expedite the process, Tangedco must accelerate land acquisition and initiate the projects promptly.
A crucial aspect of this transition involves promoting solar rooftop schemes across the state, facilitated by the union government’s 40%subsidy for consumers installing solar panels. Besides, Tangedco can install solar rooftops in all government buildings. This approach also aligns with the vision of a self-reliant India, an ‘Atmanirbhar Bharat,’ championed by Prime Minister Narendra Modi and his government.
As of March 31, 2014, Tangedco served 2,52,31,536 consumers, a number that has now increased to an impressive 3.31 crore. Annually, around 9-10 lakh new connections are added. Therefore, keeping in line with the growing number of service connections, it becomes paramount to enhance the utility’s own power generation abilities while gradually reducing dependency on private power purchases, thus safeguarding the welfare of the utility and its dedicated employees.
As of now, Tangedco is working on thermal and hydro power generation projects with a combined capacity of 4,620 MW.
Revenue gap
The Tangedco is facing continuous financial losses due to the gap between average revenue realisation and the average cost of supply. The revenue gap, which stood at Rs 634.91 crore in 2018-19, escalated to Rs 863.41 crore in 2022-23.
Footnote is a weekly column that discusses issues relating to Tamil Nadu
E Natarajan is the state general secretary of Bharathiya Electricity Engineers Association, the Electricity wing of BMS with 25 years of experience in the power sector. He is also a member of the Institution of Electrical and Electronics Engineering (IEEE)