TSGENCO: Healthy revenue, profit and generation levels

Healthy revenue, profit and generation levels

Telangana State Power Generation Corporation Limited (TSGENCO) was incorporated in 2014, when the pre-existing state of Andhra Pradesh was bifurcated to form a new state, Telangana. Since then, the genco has been continuously expanding its generation capacity to meet the growing power demand. The genco has added 1,760 MW of generation capacity to the Telangana state grid. During 2019-20, it was ranked second among all state sector power utilities in the country with a 71 per cent plant load factor (PLF), which was higher than the national average PLF of 56 per cent. To meet the future demand growth, the utility has planned capacity additions of 4,540 MW, which will enable the state to become power surplus by 2022.

Installed capacity

As of December 2020, TSGENCO’s total installed capacity stood at 5,945.3 MW, comprising thermal, hydro and solar. Its thermal capacity stood at 3,502.5 MW, hydro at 2,441.8 MW and solar at 1 MW.

Its thermal power plants (TPPs) include the 1,000 MW Kothagudem TPPs – Stages V and VI; the 800 MW Kothagudem TPP Stage VII; the 1,100 MW Kakatiya TPPs (500 MW Stage I and 600 MW Stage II); the 62.5 MW Ramagundam B TPP and the 540 MW Bhadradri TPP Units 1 and 2 (270 MW each). Of these, Unit 2 of the Bhadradri TPP was commissioned fairly recently, in June 2020. The engineering, procurement and construction (EPC) contractor for the project, Bharat Heavy Electricals (BHEL), was responsible for the supply of key power generation equipment of the plant.

Meanwhile, TSGENCO has retired seven generating units totalling 720 MW at its existing Kothagudem TPS, of which 300 MW was retired in January-February 2019 and 420 MW in February-March 2020, as they had exceeded their useful life and had higher emission levels. This was in line with the environment ministry’s directions to shut down all sub-critical units in a phased manner.

TSGENCO’s hydropower stations include the 900 MW Srisailam Left Bank, the 815.6 MW Nagarjuna Sagar, the 240 MW Lower Jurala, the 234 MW Priyadarshini Jurala, the 120 MW Pulichintala, the 60 MW Nagarjuna Sagar Left Canal, the 36 MW Pochampad, and four small and mini hydel projects with an aggregate capacity of 36.2 MW. The Nagarjuna Sagar and Srisailam Left Bank hydropower stations are pumped storage projects equipped with reversible-type pump-turbine motor generating units. Further, TSGENCO operates a 1 MW solar plant at Jurala.

Operational performance

The company sold 20,995 MUs of electricity from TPPs during 2019-20, a marginal increase of 0.12 per cent from the 20,969 MUs sold in the previous year. TSGENCO’s thermal power generation increased at a compound annual growth rate (CAGR) of 5.5 per cent between 2014-15 and 2019-20. As per the Central Electricity Authority, the average PLF of TSGENCO’s thermal stations decreased from 77.54 per cent in 2018-19 to

70.66 per cent in 2019-20, mainly due to subdued demand on account of Covid-19. During 2020-21 (till January 21, 2021), the company generated 15,642.13 MUs of electricity from TPPs, with an average PLF of 68.52 per cent.

In contrast, hydropower generation increased substantially from 1,753 MUs in 2018-19 to 4,509.4 MUs in 2019-20. Between 2014-15 and 2019-20, TSGENCO recorded a CAGR of 7.6 per cent in hydropower generation. The genco, which relied on thermal power owing to the abundant availability of coal, has started diversifying its power generation with hydel, as wind and solar power generation in the landlocked state are yet to pick up. During 2020-21 (till January 21, 2021), the company generated 3,161.47 MUs of electricity from hydropower plants. The Srisailam Left Bank hydroelectric power plant (Units 3, 4 and 6 – 150 MW each) tripped on August 20, 2020 on account of a fire incident and is now unavailable for service. However, revival works are under way with high safety standards and the units are expected to be revived by June 2021.

Financial performance

During the three-year period 2016-17 to 2018-19, TSGENCO’s total revenue increased at a CAGR of 16.1 per cent, from Rs 81.08 billion to Rs 109.27 billion. During the same period, its profit after tax (PAT) increased significantly at a CAGR of 83.9 per cent from around

Rs 760 million to Rs 2,570 million. In terms of year-on-year performance, the company’s total revenue increased by 24 per cent in 2018-19, from Rs 88.16 billion in 2017-18. Its PAT decreased by 30 per cent from Rs 3,650 million in 2017-18. The total expenditure stood at Rs 107.75 billion in 2018-19, increasing at a CAGR of 6.2 per cent from Rs 79.77 billion in 2016-17. The average cost of supply stood at Rs 5.10 per kWh in 2018-19, as compared to Rs 4.40 per kWh in 2017-18.

Capacity addition plans

Going forward, TSGENCO has significant thermal capacity addition plans. Nearly 4,540 MW of power projects are proposed to be set up by TSGENCO by 2022 at a total investment of nearly Rs 350 billion. The two flagship projects that are in the pipeline are Units 3 and 4 of the 4×270 MW Bhadradri TPP and the ultra mega 5×800 MW Yadadri TPP, both of which will be executed by BHEL.

The Bhadradri plant received approval from the Ministry of Environment, Forest and Climate Change in 2017, which was long pending due to an order from the National Green Tribunal. While all the units were initially expected to be commissioned by 2017, the delay in obtaining clearances has pushed the commissioning date to 2021. The Yadadri TPP is based on supercritical technology. It was originally scheduled to be commissioned by 2021, but is now expected to be commissioned by June 2022.

The nationwide lockdown due to the coronavirus pandemic and the movement of the migrant workforce impacted project implementation timelines. The scheduled commissioning of the two units of the Bhadradri TPP was shifted from the end of May 2021 to end December 2021. In view of this, TSGENCO has asked BHEL to engage more workers and take up works parallelly to meet the scheduled timelines so that adequate power capacity is available to meet the likely increase in power demand.

Besides new projects, TSGENCO is retrofitting its existing projects with emission control equipment in order to comply with the environmental regulations. It has completed the feasibility study for the 1,100 MW Kakatiya TPP (the 500 MW Stage I and 600 MW Stage II) and the 500 MW Kothagudem TPP Unit 2 for the installation of flue gas desulphurisation (FGD) systems.

In 2018, the utility awarded an order worth Rs 10 billion to BHEL to supply FGD systems for the 800 MW Kothagudem TPP Stage VII and the 4×270 MW Bhadradri TPP. The order for the Bhadradri TPP also covers modification in the boiler and electrostatic precipitators to meet the revised emission norms. BHEL is currently executing these projects on EPC basis.

Issues and the way forward

The utility has an extremely small renewable energy footprint with an installed solar capacity of only 1 MW, despite the state’s vast solar potential. TSGENCO can expand its renewable energy portfolio by tapping into this segment. With regard to projects in the pipeline, the utility needs to ensure timely completion in order to avoid cost overruns. In the past, TSGENCO has faced delays in project execution on account of land acquisition, heavy rains and floods, protests by villagers, non-provision of inputs by contractors, etc.

That said, Telangana has experienced steady growth in power consumption in recent years and now has a per capita power consumption of around 2,071 units (2019-20), the highest in the country. TSGENCO has demonstrated a track record of healthy power generation levels, revenues and profits. It has been playing a key role in meeting the state’s growing power requirements. Going forward, its capex in upcoming capacities is expected to ensure that it remains on a strong footing to cater to the state’s future power requirements.