National Electricity Policy: Govt panel recommends tough norms to start new coal-based units

Apart from the recurring themes such as grid-strengthening, financial viability and consumer centricity, which are generally taken into consideration while framing policies for the electricity sector, sources said that the latest set of recommendations also includes suggestions to discourage the construction of new coal-based power plants.

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The government had constituted a panel led by former chairperson of the Central Electricity Regulatory Commission Girish Pradhan in April to prepare the draft NEP, 2021.

In its recommendations concerning the National Electricity Policy (NEP), a panel constituted by the Union power ministry has highlighted the objective of ‘decarbonisation’ to cut carbon footprint in power generation and consumption. Apart from the recurring themes such as grid-strengthening, financial viability and consumer centricity, which are generally taken into consideration while framing policies for the electricity sector, sources said that the latest set of recommendations also includes suggestions to discourage the construction of new coal-based power plants.

The committee is said to have recommended that new coal-based power plants can be constructed to replace older units of similar capacities, only after “it is convincingly established that it is not viable to meet the projected demand from alternate non-fossil sources”. However, it acknowledged that “coal-based generation will continue to be needed to meet the base load and balancing requirements till commercially viable energy storage solutions are developed and available at scale”. It has also suggested retrofitting existing coal-based power plants to make them more flexible, so that they can easily start up or shut down according to generation from solar and wind plants.

Higher use of technologies such as pumped hydropower plants, battery storage and other emerging technologies have also been recommended, which would address the issues of intermittency of electricity supply from renewable energy-based sources. The government had constituted a panel led by former chairperson of the Central Electricity Regulatory Commission Girish Pradhan in April to prepare the draft NEP, 2021.

However, these preliminary recommendations are said to go through several rounds of scrutiny from various stakeholders.
Recommendations also include the deepening of competitive power markets, to increase the share of spot markets in overall electricity procurement from the current level of around 5% to 25% by FY24-end. To encourage the open market for power procurement, the committee has suggested that the current system where coal supply linkages are provided to power plants with long-term power purchase agreements has to be gradually discarded.This is seen to enable the power plants with untied capacity to participate in the short-term power market and supply electricity at competitive rates.

The last NEP was formulated in 2005, and since then, per capita power consumption has nearly doubled to the current level of 1,208 units. Share of renewable electricity has increased to 10% of overall consumption from 0.75% in the same period. The Electricity Act 2003 requires the Centre to formulate the NEP in consultation with the Central Electricity Authority and state governments.%

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