The Ministry of Power (MoP) is urging power generation companies (GENCOs) to sell their unutilized electricity in the power market. This move aims to optimize national power capacity and address concerns about unused generation potential. This clarification was issued on April 22, 2024.
The Ministry has observed that some power generators are not offering surplus power (beyond their contracted commitments) in the market. This leads to unused capacity at the national level, potentially impacting grid efficiency.
The Regulations:
- The Electricity Act, 2003 and the Tariff Policy, 2016 mandate power plants to be operational and ready to dispatch electricity whenever needed.
- Ministry also issued Guidelines for operationalizing optimum utilization of generating stations as per the requirement in the Electricity Grid
- Generators can sell surplus power in the market, following established Central Government policies.
- Recent amendments to the Electricity (Late Payment Surcharge and Related Matters) Rules further emphasize the sale of surplus power.
Some power producers raised concerns about existing Fuel Supply Agreements (FSAs) restricting the use of coal for purposes beyond long-term contracts with DISCOMs (power distribution companies). Hence, the Ministry has clarified that generators, including those with long-term FSAs, can sell surplus power in the market as per the Electricity Act and related regulations.
Benefits of Selling Surplus Power:
- Increased utilization of available generation capacity.
- Improved grid efficiency and potential cost savings.
- More competitive power market with potentially lower prices for consumers.
