Thermal power plants can sell surplus power from ‘linkage coal’ in market

News Excerpt:

The Ministry of Power has clarified that the coal-based thermal plants can use linkage coal to offer surplus power in the power market.

More about the news:

  • The clarification was issued to ensure “optimum utilization of generating stations” as India braces for a hotter-than-normal summer, which is set to push peak demand to a record 260 GW.
  • The power ministry has already issued instructions to imported coal-based units and all gas-based thermal plants to remain operational during the coming months to avoid power outages.
  • The clarification referred to Section 9(5) of the Electricity (Late Payment Surcharge and Related Matters) Rules, 2022.
    • The rules “provides for sale of surplus power, which is within the declared generation capacity but not requisitioned by distribution companies”. 
  • The thermal power plants can use coal supplied through long term contracts to sell surplus electricity in the power exchange.

What is coal linkage policy?

  • Coal linkage policy is a central government designed guidelines for the allocation of coal among thermal power firms.
    • The central government designated the Central Electricity Authority to design and issue methodology for coal linkage. 
  • Under the coal linkage policy, a state’s coal requirement would be clubbed and assigned to the respective state or state-nominated agencies. 
  • Coal linkages would be awarded to designated state-owned power distribution companies (DISCOMs). 
  • The state through DISCOMs, then, awards coal linkage according to applicant’s need, efficiency and cost of power to the power plants in its territory including the private sector. Allocation to the private sector will be made through auction.  .

SHAKTI Policy:

  • The Union Government on 17th May 2017 cleared the New Coal Linkage Policy known as SHAKTI (Scheme to Harness and Allocate Koyla (Coal) Transparently in India). 
  • The Policy provides coal linkages to power plants which lack fuel supply agreements (FSAs) through coal auctions.
  • SHAKTI Policy is a transparent way of allocating coal to the Power Plants including stressed power plants.

Why India is more dependent on thermal power plants:

  • The variability in renewable energy generation is consequently putting pressure on the base load capacity, especially thermal units, especially during evening hours of low sunlight and surging demand. 
    • Even though India added a record renewable capacity of over 18 GW in FY24, much of the generation capacity addition over the last ten years has been by way of renewable power capacity.
  • India’s reliance on coal and gas to meet peak demand is more pronounced given the absence of an adequate energy storage infrastructure in the country, which can help store excess energy generated by solar and wind plants during non-peak hours and release it during peak hours.

Book A Free Counseling Session