PremiumRecently, the power ministry also mandated 6% blending of imported coal till September 2023 amid concerns that there could be a deficit of around 24 million tonnes in the next financial year.
New Delhi: The Centre is expected to allow power generation companies to sell electricity produced from coal allocated under the Shakti policy on exchanges till the signing of power purchase agreements (PPA).
Two people aware of the developments said the power ministry has prepared a draft cabinet note proposing such short-term sale of power.
The ‘Scheme for Harnessing and Allocating Koyala’ (Shakti) policy was introduced after a cabinet approval in 2017 to streamline issues relating to the supply of coal to power plants, which allowed for coal linkage for the medium and long term. The scheme was later amended to introduce short-term linkage without PPA under Shakti B (viii)(a).
“Centre may allow non-PPA holders to sell power generated from coal allocated under Shakti (B) (iii) through platforms like real-time market and time-ahead market on the power exchanges or through the Discovery of Efficiency Energy Price (DEEP) portal," said one of the two people.
Further, the government may also allow successful bidders of Shakti (B) (iii) auctions to participate in auctions for short-term linkage during the intervening period between the signing of the fuel supply agreement (FSA) and the PPA, which was so far not allowed. The FSA is signed between the coal producing company and the genco and the PPA is the pact for supply of power between gencos and buyers. Under the Shakti B(iii) auctions, signing of the FSA takes about three to four months to complete once the auctions take place.
Under provisions of Shakti B(viii)(a), all power plants including private generators not having PPAs, are allowed to draw coal for short term (3-12 months). Gencos will have to sell power on the exchange before signing the PPA keeping in view the price ceiling mandated by power ministry, said the second person.
Queries sent to spokespersons of the ministry of power remained unanswered till press time.
Experts suggest that such a move would ensure short-term product for trading of power on the exchanges including real-time market and the time- ahead market and also ensure continuity in the supply of power as plants can continue to generate electricity during the intervening period of procuring the PPA and signing of FSA.
The move comes at a time the government has acted to ensure adequate availability of power when demand is expected to peak in the months ahead.
Recently, the power ministry also mandated 6% blending of imported coal till September 2023 amid concerns that there could be a deficit of around 24 million tonnes in the next financial year.
A directive from the ministry to the gencos also noted that due to a recent surge in demand and consumption of electricity, the share of coal-based generation has increased. Although the supply of coal from all sources has increased, it is not commensurate with the requirements of thermal power plants (TPPs), it said.
Although, Centre had been confident of adequate coal supplies in the next peak demand season of April-May 2023 given the country has imported coal lying at the ports and the domestic production also has increased, the recent sudden spike in power demand during the winters, which usually is a lean phase for power demand has raised fears of an major increase in power demand going ahead.
The country had faced major power crisis situations in September-October 2021 and April-May 2022 amid low availability of domestic coal and high international prices of the fuel, making the government turn proactive this time around.
The Union government aims to have a stock of around 118 million tonne of domestic coal in the country by the end of the current financial year (FY23) in a bid to avert a crisis situation during the peak power demand period of April-May.