Govt weighs incentives for thermal plants to run at 40% load to aid RE integration

New Delhi: To facilitate the integration of variable Renewable Energy (RE) into the power grid, the government is considering luring reluctant thermal power plants with incentives to get them to operate at a minimum technical load of 40 percent. “We want to go beyond compensation and offer these thermal power plants incentives for lowering the minimum technical load further down to 40 percent,” said Central Electricity Authority (CEA) Chairperson Ghanshyam Prasad.

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At present, the minimum technical load at which the thermal power plants of India’s largest power utility, NTPC, can operate is 55 percent. The plan has received pushback from thermal power plants because running the plant at a load factor of 40 percent significantly reduces its life span. NTPC Director (Operations) Ravinder Kumar said, “Running plants at 40 percent reduces its lifespan by one-third.”

CEA mandate on flexible operation

CEA has already formalised a roadmap for flexible operation of coal-based thermal units. Under its regulations notified in December 2023, plants must currently operate at a minimum load of 55 percent, with ramp rates of 1–3 percent per minute depending on load bands. The framework requires plants to gradually enable operations down to 40 percent minimum technical load (MTL) in phases, with deadlines stretching to 2030. Several demonstration runs, including at NTPC’s Ramagundam unit and KPCL’s Raichur station, have shown that 40 percent operation is technically feasible, though retrofits are often required.

Prasad added, “If those (retrofitting) investments are made, the machines can run at lower loads. But it will affect efficiency, and that’s where compensation mechanisms should be considered.”

Compensation framework from CERC

Recognising the efficiency losses and additional costs of such flexible operations, the Central Electricity Regulatory Commission (CERC) has approved a detailed compensation mechanism. Under the Tariff Regulations, 2024 and the NLDC Procedure cleared in July 2025, coal plants are eligible for recovery of costs linked to higher station heat rate (SHR), increased auxiliary energy consumption (AEC), and secondary fuel oil use when operating at part-loads, including at 40 percent.

The formula-based framework allows plants to recover the gap between actual degraded energy charges and normative ones, with a 50:50 gain-sharing mechanism if costs turn out lower. Annual compensation is also admissible for start-ups beyond seven per unit per year that occur due to low requisition. These costs are to be allocated to beneficiaries in proportion to their unrequisitioned energy or, in certain cases, covered from the ancillary services pool.

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