Power plants can now sell surplus outside PPAs

The government has allowed imported coal-based power plants to sell any surplus electricity to states other than those with which they have supply tie-ups.

The power ministry has issued a clarification to the emergency clause invoked in May this year that mandated non-operational imported coal-based plants to start generation amid a sharp rise in power demand.

They could sell surplus electricity on the power exchanges if the beneficiary states did not buy the entire electricity generated.

The dispensation will be valid till October end.

As per the dispensation issued last week, if the imported coal-based plants do not get requisition from their consumer states for supply three days in advance for the next week, they can sell the power to another distribution company at an energy charge determined by a government panel plus fixed cost, a government official said.

"The power demand has reduced on account of rains. But between rain spells and post-monsoon, the electricity demand will rise owing to humid weather conditions," an executive with one of the imported coal-based power plants said.


"The government's directive will help the states and power plants in such a scenario."

The states having power purchase agreements (PPAs) with the projects would not be required to pay the fixed costs for such duration.

The clarification has been issued since prices on power exchanges have fallen due to low demand and the power projects are not able to operate, the official said.

"Some imported coal-based plants are neither able to sell power to PPA holders due to non-requisitioning nor able to sell power through the power exchanges owing to low rates," the clarification said. "It leads to the capacity lying idle, while some states desire to tie up with such power for a specified duration against the uncertainty of volume getting cleared in the power exchange."

The main order issued by the power ministry in May by invoking Section 11 of the Electricity Act is in force till October end.

The order was issued as a lack of power generation from imported coal power plants had put pressure on domestic coal supplies and stocks. Section 11 is an emergency clause allowing the government to issue directions to power generating stations under extraordinary.