As the mercury begins to escalate with the onset of summer, the Ministry of Power in a strategic move issued a crucial clarification to all coal-based thermal power plants on Monday. In anticipation of a soaring peak power demand that is expected to reach an all-time high of 260 GW, the government addressed the optimal use of generating stations across India. This decision emerges amidst a scenario where the nation prepares to confront hotter-than-average temperatures in the upcoming season.
The critical announcement responds to the concerns voiced by generating companies over regulatory limitations pertaining to the use of linkage coal. Linkage coal refers to allocations made by the government under long-term contracts with these power utilities, traditionally intended to ensure compliance with firm power purchase agreements with distribution companies or Discoms. The Ministry has now clarified that surplus electricity produced with linkage coal can indeed be “offered” in the power market. This move highlights the comprehensive Section 9(5) of the Electricity (Late Payment Surcharge and Related Matters) Rules, 2022, which allows the sale of surplus power that is within the declared capacity of the stations yet remains unrequisitioned by Discoms.
The timing of the power ministry’s declaration is critical as it coincides with directives to fifteen imported coal-based plants to run at full throttle until October 15, and gas-based power plants that had been idling to stay up and running from May through June end. As the country veers into election season, these preparatory actions by the ministry underscore a conscientious approach designed to preclude potential energy deficiencies during what are being forecasted as historically unprecedented heatwaves.
India’s strive towards addressing peak power demands has seen a significant addition of over 18 GW of renewable capacity in the fiscal year FY24 alone. However, the preponderance of such green power increments over the past decade has heightened the reliance on the steadier base load generated by thermal units. These conventional power plants become particularly indispensable during peak evening hours when solar input diminishes and the energy demand surges. India’s dependence on fossil fuels—principally coal and gas—is underscored by the nation’s fledgling energy storage systems, which if advanced, could stabilize the supply by harnessing excess renewable energy produced during off-peak periods for use during demand spikes.
Recent years have seen a contraction in the variance between peak power demand and supply—diminishing from an average peak deficit of -5.9% from FY10 to FY19, to about -1.5% from FY20 to FY24. Despite this progress, there looms the risk of a widening gap if burgeoning renewable capacity isn’t aptly supplemented with corresponding energy storage solutions.
During FY23, the country faced a peak deficit of -8.7 GW, marking 4 percent of April’s peak demand of 216 GW. In FY24, peak demand preceded that figure, reaching 243 GW in September, yet the deficit ratio was notably reined in at 1.4 percent, partly due to cooler than anticipated temperatures brought on by unseasonal rains.
If we delve into instances of net electricity shortage, April in FY23 experienced the most significant shortfall of 2 percent, tailed by June and January with a 0.6 percent deficit each. Moving to FY24, August saw the highest deficiency at 0.6 percent, followed by January at 0.5 percent, and October at 0.4 percent.
Collectively, these measures and clarifications from the Ministry of Power illuminate a concerted effort to equip the nation’s energy infrastructure to manage and potentially offset the vicissitudes of peak demand. As the nation grips for a challenging summer, actions such as the current commissioning of thermal power producers to tap into surplus generation capacity stand as a testament to the commitment to ensuring energy security for all.
