A roadmap for Karnataka state power generation companies

Electricity generation companies (GENCOs) are currently in the throes of a transition. There is ample availability of renewable energy (RE), and that too at a price cheaper than that charged by conventional power plants.

Therefore, power demand from distribution companies (DISCOMs) is shifting from coal-based thermal power plants to RE power plants. Additionally, DISCOMs are signing power purchase agreements (PPAs) with upcoming low-cost RE generators to reduce their average power purchase cost leading to the backing-down or shutting down of thermal assets.

In Karnataka, the situation is much more precarious for conventional power plants. The state has a significant installed RE capacity. It has attained its annual solar capacity target, and is compliant of annual renewable purchase obligation (RPO) targets. A reduced demand from DISCOMs for conventional power will result in the poor financial performance of state thermal power plants (TPPs) in the long run.

Changing Dynamics

Independent power producers and central generating stations have alternative business models to deal with such circumstances. Most GENCOs share power with multiple state DISCOMs and buyers.