The move aims to reduce the cost of power for state-owned power distribution companies (discoms) that are facing financial difficulties.

This approach will replace the existing merit order despatch of power, which is based on availability. Company officials said if cheaper power was made available for states, the demand would also pick up and states could plan their power supply accordingly.

About half of NTPC’s 40.4 Gw coal-based installed capacity, generates power at Rs 3 or lower. The company will add a 5,000-Mw coal-based capacity this year.

“The average tariff of NTPC has not increased in the past five years and remained in the range of Rs 3.23-3.25 per unit. This is despite the cost of coal increasing by 35 per cent during the same period.

We have recovered the fixed cost for most of the power plants and thereby plan to pass on the cheaper electricity in an efficient manner across the country,” said an official.

NTPC is in discussion with Power Grid Corporation, the central transmission utility, to execute the plan. The company plans to load cheaper power first into the grid and plan the despatch accordingly as per the tariff.

It will meet the supply schedule of the states it has signed power purchase agreements (PPAs) but the source of power would be as per the tariff.

Peak demand which is over and above the contracted capacity would be met through the costlier power left after meeting all requirements.

The move is also in line with a recent proposal of the Centre to introduce flexibility in generation scheduling. It provides flexibility for substituting thermal power by renewable power against given schedule.

This will help in growth of renewable and grid balancing, the policy envisaged.

NTPC has been reorienting its power supply planning and schedule over the past one year. Business Standard recently reported that NTPC would back down thermal power at some of its units to blend renewable energy and sell them together.

Officials said the company had placed a tender to procure 2,000 Mw of solar and wind power which would be blended with non-pithead units, which are far from coal mines.

Last year, NTPC had decided to maximise output per unit by running efficient plants at higher PLF and this includes the pithead plants. Plants farther than 500 km from coal mine are operated at lower PLF.

NTPC aims to operate them as Peaking Units as share of renewable increases in the grid.

NTPC registered a six per cent generation growth in the last fiscal with total power generation touching 265 billion units.

The maharatna PSU is now a 50,000 MW power generating company running at a PLF of 76.46 per cent (as on February 2018), higher than the national average PLF of 64.9 per cent.