Tatsat Chronicle Magazine

Power ministry comes out with rules to ensure sustainability of sector

October 23, 2021

According to the ministry, new rules will assist in meeting the RE generation targets

The Ministry of Power has released a new set of guidelines aimed at preserving the power sector’s economic viability, reducing financial stress among diverse stakeholders, and ensuring prompt cost recovery in electricity generation. Investors and other power industry stakeholders had been concerned about the timely recovery of expenses due to changes in the law, renewable power curtailment, and other related issues. Electricity (Timely recovery of costs owing to a change in law) Rules, 2021, and Electricity (Promotion of generation from renewable sources of energy by resolving Must Run and other topics) Rules, 2021, are the two categories of rules.

The ministry stated that with the change in law, timely recovery of expenses will become more important, as investment in the power sector is heavily reliant on timely payments. The new rules state that a must-run power plant’s generation or power supply will not be curtailed or regulated due to merit order dispatch or any other commercial consideration. The provisions of the Indian Electricity Grid Code must be observed for power curtailment or regulation. If the procurer’s supply from the must-run power planet is interrupted, the procurer is responsible for compensating the must-run power plants at the rate agreed in the purchase agreement.

In addition, the ministry stated that due to the impact of the new law, a new formula has been issued to compute monthly adjustments. The RE generator may also sell power on the power exchange and recoup its costs appropriately. This aids in the generation of revenue for the generator, as well as the availability of power in the electricity grid for consumer consumption. According to the ministry, the new restrictions would aid in the achievement of the RE generation objective. Furthermore, this will ensure that consumers have access to green and clean energy, so ensuring a healthy environment for future generations.