25,000 Megawatt of thermal power capacity running without long term pacts

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Thermal power projects of more than 25,000 Megawatt (MW) capacity are operating without long term power purchase agreements (LTPPA’s) with state owned discoms, according to ICRA.
State owned discoms have created a trend over the past two to three years, of buying power from trading markets for a cheaper price when compared to signing fixed rate PPA’s with thermal power plants. This decision by state owned distributors has given them the freedom to buy power at cheaper rates from exchanges and also create a highly competitive bidding environment to lower tariffs even further. Discoms are expected to sign LTPPA’s in the future, with the implementation of UDAY across the country and improvement of discoms financial health.
Only four states namely Andhra Pradesh, Kerala, Telangana and Uttar Pradesh have invited bids to sign long term PPAs for an aggregate bid capacity of 7.5 GW.

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