In a strategic move by the Indian government to mitigate the impending electricity crunch, the Centre has issued orders to all gas-based power generating stations to ensure they are fully operational from the onset of May to the end of June this year. The early emergence of heatwave conditions has led to a rise in electricity consumption, prompting this unprecedented directive to activate a combined capacity of 25 gigawatts from the gas-based power stations across the nation.
The operationalization of these gas-based units, however, does not come without financial strain. With the high operational costs being a significant hurdle, these units are expected to incur losses during this period. Despite this challenge, the Power Ministry’s recent statement did not address whether there would be adjustments to tariffs that could potentially offset the financial losses the units might suffer.
This decree to gas-based power plants comes on the heels of an earlier mandate issued to power plants running on imported coal, which were instructed to function at full capacity until October 15. India’s weather department has signalled the possibility of above-normal temperatures and more frequent heatwaves this summer, and hence electricity demand is forecasted to soar, potentially reaching a peak of 250 gigawatts during the warmer months.
Under the ambit of Section 11 of the Electricity Act of 2003, which allows the government to give directions for power generation under extraordinary circumstances, the government has pointed out, “The order under Section 11, which is on similar lines as done for imported-coal-based power plants, seeks to maximize the availability of power from gas-based generating units during this high demand period.”
The order is an acknowledgement of a stark reality—much of the gas-based power capacity remains dormant, largely due to a framework of commercial viability which does not favor their operation.
Furthermore, GRID India is tasked with the responsibility of communicating to all gas-based generating stations the exact number of days their power production is required. Priority will be given to plants involved in power purchase agreements (PPAs) with distribution licensees, who must first offer their power to these holders. If, however, the PPA holders do not utilize the power offered, it will then be made available in the open power market. Stations without PPAs are to directly offer their generated power in the market.
To ensure smooth execution of these directives, a high-level committee led by the chairperson of the Central Electricity Authority has been established to facilitate the operation of the gas-based power plants.
The government is not stopping at the activation of gas-based power plants; it has unveiled a suite of countermeasures to anticipate the summer demand for power. These include expediting new power capacities, scheduling maintenance activities of power plants during the monsoon season, and offering surplus power to energy exchanges.
With the Indian Meteorological Department’s forecast of an unusually hot summer with maximum temperatures expected to be above-normal across most regions of the country, these interventions are timely and critical. This summer’s peak demand could surge to an unprecedented 260 gigawatts, which is reflective of the urgency required in implementing these government directives.
In anticipation of high electricity demand, these efforts are introduced with an eye towards preventing an energy crisis, particularly as industries experience higher capacity utilization and a new investment cycle commences. Coal India, a major player in the coal industry, has escalated its coal supply targets for the year. The company is aiming for an 11% increase from the previous year, with intentions to deliver 171.4 million tonnes of coal to the power sector within the first quarter of the fiscal year. As per insider information, the total demand for coal from the power ministry for the fiscal year 2024-25 stands at 874 million tonnes, of which Coal India is slated to provide 661 million tonnes.
These combined measures are being taken to ensure the country’s electricity supply remains uninterrupted during periods of heavy demand, thus upholding economic stability and meeting public needs in the face of the intensifying heat.
