MUMBAI: NTPC, the state-owned power giant, has proposed a comprehensive capacity pooling strategy to the Ministry of Power, aiming to optimise power costs and enhance the viability of new thermal units.
This initiative, if approved, could significantly alleviate the high capital costs associated with the new thermal capacities NTPC is adding, ultimately benefiting end consumers with more affordable electricity. Industry analysts suggest that pooling the entire capacity could enable NTPC to attract users for its newer, more expensive plants by balancing the higher charges with the lower costs of older plants. This would help increase the plant load factor, ensuring better utilisation rates across its fleet. According to senior NTPC officials, the company has formally requested the power ministry’s approval to pool its entire capacity for nationwide power distribution. This pooling mechanism is expected to streamline power costs and enhance efficiency as new thermal projects become operational in the coming years.
“The cost of new capacity is significantly higher. It is now very challenging to construct a plant for less than ₹10 crore per megawatt, a figure that has nearly doubled in the past decade,” an NTPC official explained. “Without pooling, the incremental utilisation of these plants would be much lower, leading to very high per unit capacity charges. This would inflate power costs and negatively impact the economy’s competitiveness.”
Approval of NTPC’s proposal could offer operational flexibility and ensure a steady power supply to distribution companies (discoms) and states, particularly during plant malfunctions or shutdowns. This flexibility is crucial for maintaining a reliable power grid and avoiding disruptions. From NTPC’s perspective, a pooled pricing model could facilitate easier offtake for its new thermal projects, which currently face weak competitiveness. “Pool-level pricing will help NTPC find buyers for these new projects more readily than under the current scenario,” said an official from ICRA, a leading credit rating agency.
The strategy also aligns with NTPC’s broader goals of maintaining a balanced energy portfolio and supporting the nation’s energy security. By distributing the cost of new and old capacities more evenly, NTPC can mitigate the financial impact on consumers and discoms while ensuring that newer, more expensive plants do not become underutilised or economically unviable. NTPC’s capacity pooling proposal represents a strategic approach to manage rising capital costs and ensure sustainable power pricing. This initiative, pending approval from the Ministry of Power, promises to enhance operational efficiency, secure steady power supply, and support economic competitiveness by curbing inflated power costs. As the power sector evolves, such innovative strategies will be crucial for balancing cost, efficiency, and reliability in India’s energy landscape.
