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Govt enables imported coal power plants to sell in markets; Adani, Tata plants to ease crisis

Govt enables imported coal power plants to sell in markets; Adani, Tata plants to ease crisis

The government on Friday invoked provisions under National Tariff Policy that will immediately enable imported coal-based power projects to sell electricity on the exchanges to cool prices in the spot market averaging at a record Rs 16 per unit.

With this order

Adani Power


Tata Power

are expected to begin generation in some units of their imported coal-based projects in Gujarat in a day or two as they have imported coal stocks. Most imported coal-based power plants are not operating despite high power scenario in the country since coal prices in international market have touched $150 a tonne.

The Union power ministry’s new guidelines will act to build consensus between the imported coal-based plants that will restart generation, while states would agree to not schedule the electricity so that it can be sold on the exchanges. While power plants get to operate their projects, states will benefit as prices on exchanges fall and also they get to share half of the gains made by the generating through the sale, an official said.

The official said the guidelines do not outreach the legal sanctity of PPAs executed between the generators and procurer states and are well within the ambit of the National Tariff Policy.

The guidelines on ‘Operationalising optimum utilisation of generating stations as per the requirement in the electricity grid’ said some power plants are not generating to their full capacity at any given time and the unutilised capacity remains idle as they are tied up under power purchase agreements.

In the public interest, such power needs to be despatched, where there is a requirement in the grid by the other users or consumers, it said.

“As per the Tariff Policy, 2016, power stations are required to be available and ready to dispatch at all times. For optimum utilisation of un-requisitioned generation capacity of any generating stations regulated under Section 62 as well as those having PPA (power purchase agreement) under Section 63 of the Electricity Act, 2003, the generators have been permitted to sell power in the power market in consonance with laid down policy of the Central Government,” it said.

The guidelines reiterate the provisions of the Tariff Policy that if a discom does not requisition power from the power plant with which he has signed the PPA, 24 hours in advance prior to midnight of the day of delivery of power, the generator shall be free to sell the unrequisitioned power in the power exchange.

The Tariff Policy also provides that the gains from sale of such power (after deducing energy charges) will be shared 50:50 between the two parties.

The guidelines also provide that the obligation of the discom to pay fixed charges remains same as in PPA and that they will be applicable to PPAs signed under cost-plus and tariff-based bidding.

Imported coal prices were in the range of $60 per tonnes in March this year. There are about 15 Gw imported coal-fired plants in India in Karnataka, Andhra Pradesh, Gujarat and Tamil Nadu.

Of the 165 Gw monitored domestic coal-fired plants, 136 Gw was operating with critical coal stock. Spot prices on Indian Energy Exchange have touched Rs 20 per unit and average prices have shot off the roof.

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