The Ministry of Power has clarified that power stations must always be available and ready to dispatch power according to the Tariff Policy 2016. Power generators can sell surplus power in the power market to best use unutilized generation capacity.

The clarification, sent to energy departments of all states and generating companies, comes amid concerns that some power generators are not offering surplus power in the power market, leading to unused capacity.

In October 2021, the Ministry of Power issued guidelines for operationalizing the optimum utilization of generating stations as per the requirements of the electricity grid. These guidelines aim to ensure that power generators can effectively utilize their capacity by selling surplus power in the market.

Section 9(5) of the Electricity (Late Payment Surcharge and Related Matters) Rules of 2022, later amended in 2024, empowers generators to sell surplus power within their declared generation capacity, even if distribution companies do not requisition it.

Despite these provisions, the Ministry of Power has received feedback from power utilities highlighting certain restrictions in existing agreements. For instance, Fuel Supply Agreements (FSAs) and agreements under SHAKTI B (ii) for independent power producers restrict linkage coal solely for fulfilling long-term power purchase agreement obligations with distribution companies.

In response to these concerns, the Ministry of Power clarified that generating companies, including those with long-term coal linkages under FSAs, can offer surplus power in the market.

This clarification, under the provisions of the Tariff Policy of 2016 and the Electricity (Late Payment Surcharge and Related Matters) Rules, aims to promote a more dynamic and responsive electricity market by utilizing power generation capacity efficiently.

By allowing power generators to sell surplus power, the government aims to minimize wastage of resources.

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