Govt asks IPPs to utilise 100% capacity, mulls revival of gas plants to meet power demand

• The slew of measures come as analysts expect a spike in electricity demand between September and October first week
• In the meeting, the APP also reiterated its long-standing demand for revival of gas-based power plants

New Delhi: In the face of low coal stocks in thermal power plants (TPPs) and a lean generation from wind and hydro power plants at a time when India's all-India power demand is expected to spike, the government is reaching out to all stakeholders in order to ensure availability of power. At a meeting held on Friday with the Association of Power Producers (APP), Union Power Minister RK Singh has assured Independent Power Producers (IPPs) of coal availability and has urged them to utilise the entire established power generation capacity. He has also promised the body of taking up the issue of making gas available through a separate auction window for gas-based power plants in order to ensure their revival. 

The slew of measures come as analysts expect a spike in power demand between September and October first week on account of a retreating Monsoon and seasonal agricultural demand. What has prompted urgent meetings in the Ministry of Power and Coal with private and public stakeholders is the low availability of coal in thermal power plants at a time when the pressure on TPPs is expected to continue till October first week, with low hydro and wind power generation. According to a report by The Economic Times, a massive 100 GW thermal power plants are left with critical average coal stock sufficient to run for only a week. Even though the rate of depletion has come down in the last 3-4 days, however, the low stocks remain a concern.

3 windows for short-term coal linkage for IPPs

In the meeting held on Friday, the Power Minister emphasised on the need for making certain that the entire established power generation capacity is utilised. For this, he directed that guidelines/procedures for short term coal linkage auctions under SHAKTI B for Thermal Power Plants not having Power Purchase Agreements (PPAs) should be for streamlined and simplified. The Ministry of Power has agreed to have three separate windows for auction — three months, six months and one year. The Ministry in consultation with the Ministry of Coal (MoC) will ensure its implementation, said an official statement.

In order to make coal available for longer period, the Ministry of Power will examine whether duration of auction can be extended for more than one year. The issue of Bank Guarantee is also to be examined if duration has to be extended beyond one year. According to Shakti B policy, PPA needs to be submitted within two years after the auction of coal. In the meeting, the APP requested for granting an extension in this timeline in view of lack of PPAs in the market. 

In addition, the APP has also requested the ministry to reduce the Bank Guarantee. The Power Ministry has agreed to examine the request in consultation with the Ministry of Coal. Issue of Bank Guarantee is also to be examined if duration has to be extended beyond one year.

Revive gas-based power plants: APP

In the face of a rise in power demand, the APP also reiterated its long-standing demand for revival of gas-based power plants. "APP requested for separate window for auction of gas for power plants. Issue to be taken up with Ministry of Petroleum and Natural Gas," said the Power Ministry. The current installed capacity of gas-based plants in India is 25 GW, of this 12 GW is under stress. Of 12 GW, while 5.60 GW have had absolutely no gas supplied to them in 2019-20 and 6.16 GW of plants have had limited gas supplies in the same year.

The association's request for amendments in the Mega Power Policy is also slated to be taken up through inter-ministerial consultation. In the liquidity infusion scheme, the ministry has said that equal treatment may be given to all gencos on First-In-First-Out (FIFO) Basis. The ministry has also advised IPPs on reciprocal basis not to derail the regulation of power by Central gencos in case of non-payment of dues by discoms, said the statement.

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