Power Purchase Optimization in Telangana – A Milestone Savings of ₹1,000 Crores
Telangana has set a new benchmark in power consumption by recording its highest-ever peak demand of 15,752 MW on February 6, 2025. This milestone surpasses the previous record of 15,623 MW on March 8, 2024. Over the past 14 months, the government has taken significant measures to ensure a reliable and sustainable power supply across various sectors, including agriculture, industry, and domestic consumers.
Surge in Power Demand – A Growing Trend
The state has experienced a sharp increase in electricity demand compared to previous years. Recent data highlights a 13.49% growth in December 2024 and a 10.10% rise in January 2025 compared to the same months a year earlier. This growing trend necessitates meticulous planning in both power procurement and supply management.
Peak Demand Growth Data
| Month | Last Year (MW) | This Year (MW) | % Growth |
|---|---|---|---|
| Dec’24 | 12,666 | 14,375 | 13.49% |
| Jan’25 | 13,810 | 15,205 | 10.10% |
Average Energy Supplied
| Month | Last Year (MU/day) | This Year (MU/day) | % Growth |
| Dec’24 | 207.68 | 235.25 | 13.28% |
| Jan’25 | 243.12 | 260.56 | 7.17% |
Strategic Power Procurement to Meet Future Demand
Given the rising trend in power consumption, Telangana’s distribution companies (SPDCL & NPDCL) have proactively taken steps to secure power to meet expected demand exceeding 17,000 MW in the summer season. The state plans to procure electricity from long-term contracts and power exchanges, ensuring an optimal supply at competitive rates.
The Central Electricity Regulatory Commission governs the pricing for long-term power agreements, while any shortfall is supplemented through strategic power exchange purchases. These purchases are not just for fulfilling immediate demand but also to optimize costs and maintain affordability for consumers.
Power Purchase Optimization – A Cost-Effective Approach
Telangana’s power procurement strategy involves buying electricity from the power exchange when rates are lower than the variable costs of thermal power plants. This approach significantly reduces dependency on expensive thermal power, leading to substantial cost savings.
Cost-Saving Strategy in Action
- In December 2024 and January 2025, Telangana purchased power from the exchange at an average rate of ₹2.69 and ₹2.82 per unit, respectively.
- This was notably lower than the thermal power rates of ₹3.97 and ₹4.18 per unit.
- The cost optimization resulted in savings of ₹196.68 crores in December and ₹185.27 crores in January.
Power Purchase Optimization Case Study
| Date | Total Purchase (MU) | For Demand (MU) | For Cost Optimization (MU) | Avg. Cost (₹/unit) | Thermal Cost (₹/unit) | Savings (₹ Crores) |
| 18.12.24 | 87.68 | 39.02 | 48.66 | 2.72 | 4.50 | 8.70 |
| 17.01.25 | 84.02 | 40.90 | 43.14 | 2.82 | 4.15 | 5.75 |
A ₹1,000 Crore Milestone in Cost Savings
From December 2023 to January 2025, Telangana saved a staggering ₹982.66 crores through strategic power purchase optimization. Without these savings, consumers across the state would have faced increased electricity costs.
The Government of India recognized this achievement, awarding Telangana SLDC as the best in the country among large states for its efficient power procurement strategy. The award was presented on December 14th at IIT Indore.
Conclusion – A Model for Power Management
Telangana’s success in meeting record-breaking power demand while ensuring cost efficiency sets an example for other states. With a strategic focus on power purchase optimization, long-term agreements, and sustainable energy planning, Telangana is poised to meet future energy demands without burdening consumers.
As demand continues to grow, the state’s commitment to efficiency, affordability, and sustainability will play a pivotal role in shaping its energy future. By leveraging advanced forecasting and cost-effective procurement strategies, Telangana ensures uninterrupted power supply while maintaining financial prudence.