Surplus power from “linkage coal” can be sold by thermal stations in the market: Power Ministry tells utilities as summer heat intensifies

The clarification referred to Section 9(5) of the Electricity (Late Payment Surcharge and Related Matters) Rules, 2022, which “provides for sale of surplus power, which is within the declared generation capacity but not requisitioned by distribution companies”. In other words, thermal power plants can use coal supplied through long term contracts to sell surplus electricity in the power exchange.

The latest clarification comes on the heels of the ministry’s instructions to fifteen imported coal-based thermal power plants to operate at full capacity until October 15, and to idling gas-based thermal plants to remain operational from May until the end of June. These measures underscore the power ministry’s proactive and cautious approach to mitigate the risk of power outages, particularly as the country heads into poll season amid forecasts of record-breaking heat waves.

Even though India added a record renewable capacity of over 18 GW in FY24, much of the generation capacity addition over the last ten years has been by way of renewable power capacity. The variability in renewable energy generation is consequently putting pressure on the base load capacity, especially thermal units, especially during evening hours of low sunlight and surging demand. India’s reliance on coal and gas to meet peak demand is more pronounced given the absence of an adequate energy storage infrastructure in the country, which can help store excess energy generated by solar and wind plants during non-peak hours and release it during peak hours.

While the deficit between peak demand and peak supply has narrowed in recent years, from an average of -5.9 per cent between FY10 to FY19 to -1.5 per cent between FY20 to FY24, it could widen again if the surge in renewable capacity is not adequately complemented with energy storage infrastructure. The peak deficit measures the difference between peak demand and peak supply.

In FY23, the peak deficit stood at -8.7 GW, 4 per cent of the peak demand of 216 GW in the month of April. In FY24, peak demand increased to 243 GW in September but the deficit was contained at 1.4 per cent owing to a cooler than expected summer caused by unseasonal rainfall.

In terms of net electricity shortage, April recorded the highest shortage of 2 per cent followed by June and January at .6 per cent each in FY23. In FY24, August recorded the highest shortfall of .6 per cent, followed by .5 per cent in January, and .4 per cent in October.