In a significant move, the Indian government is considering imposing a mandate on generating companies to mandatorily operate their gas-based power plants to meet the country's increasing power demand this summer.
This comes a day after the India Meteorological Department (IMD) on April 1 said that the country is set to experience extreme heat until June, with the central and western peninsular parts expected to face the worst impact. The government is expecting the power demand to peak anywhere between 256-260 GW this summer, even as it could well surpass this range if there are multiple heatwave episodes.
Moneycontrol on March 22 was the first to report that the Union government is pushing power generation companies (gencos) to buy gas and scale up electricity generation from stranded or underutilised gas-based power units. Gas-based power, units of which are easier and quicker to ramp up and down, is needed to meet the high night time peak power demand during summers when renewable energy is not available.
The government on March 22 had asked power gencos to buy more gas, citing softening of prices. Natural gas prices have witnessed around 30 percent decline in the last six months. But, slow progress by gencos in following the direction to buy gas and operationalise gas-based power plants in the past 10 days pushed the Ministry of Power on April 2 to consider imposing a mandate, a senior official in the ministry told Moneycontrol.
"The Ministry of Power will examine whether directions under Section 11 of the Electricity Act, 2003, under which the appropriate government may specify that a generating company shall, in extraordinary circumstances operate and maintain any generating station in accordance with the directions of that government, needs to be issued to gas-based power plants, on similar lines as done for imported coal-based power plants, in order to ensure their operationalisation during the upcoming summer season," read a statement issued by the government on April 2.
The government also stated that Union minister for power RK Singh has directed that a meeting be conducted with all gas-based power generating companies to review the operationalization of gas-based capacity during the summer season.
Overall, the government is looking to tap capacity of 16,200 MW, of which 10,000 MW is the biggest challenge as they are owned by private entities and state governments. The remaining 6,200 MW are Central government-run plants, which are already operating up to 3,200 MW currently.
Mandate to run imported coal-based plants extended till September
In the meeting held on April 2 on measures to be taken to meet this year's peak power demand, the government also decided to extend the emergency clause of the Electricity Act, 2003, mandating imported coal-based (ICB) power plants to run on their full capacity till September 30, 2024, instead of June 30.
Section 11 of the Electricity Act, 2003, states that under extraordinary circumstances, the government can ask power-generating companies to operate and maintain output in accordance with the directions given. It also states that an appropriate commission may consider offsetting the adverse financial impact of the directions on any generating company in such a manner as it considers appropriate.
The latest order would mean at least 15 ICB plants will have to operate at their full capacity. Some of these include Coastal Gujarat Power Ltd, Adani Power Mundra Ltd, Essar Power Gujarat Ltd, JSW Ratnagiri Ltd., Tata Trombay Ltd., GSECL Sikka Ltd., IL&FS Tamilnadu Power Company Ltd, Muthiara-Coastal Energen, and Udupi Power.
India's peak energy demand grew by 12.7 percent from 2,15,888 MW (215.88 GW) in 2022-23 to 2,43,271 MW (243.27 GW) in 2023-24, while the peak demand met grew by 13.9 percent from 2,10,725 MW (210.7 GW) in 2022-23 to 2,39,931 MW (239.9 GW) in 2023-24.
Other measures
The Power Ministry has directed to shift the maintenance of 1.7 GW of thermal power plants in April and 6 GW to 9 GW in June to the monsoon season to meet the expected rise in power demand.
"The Union minister has also directed that all thermal generating stations must offer their un-requisitioned/surplus power in power exchanges. It has been directed that compliance needs to be monitored regularly and notices issued for violation of directions. The directions have been issued to all the state governments to ensure that the total energy demand is met and there is no problem of power shortage during the summer season," the Power Ministry said in a statement.
While the minister also reviewed the status of 5.2 GW of non-operational thermal capacity, he directed that capacity additions in coal, hydro, nuclear, solar and wind would be monitored, so as to expedite their commissioning.
"It has also been decided to explore the possibility of harnessing any surplus power which may be available with captive generating stations," the Power Ministry said.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
