BENGALURU (Reuters) – The Indian Ministry of Energy proposes to let coal-fired power plants sell power after concluding their agreements with buyers, a letter from Reuters shows, despite national pledges to shut down old power plants to reduce pollution.
If approved, it would help old coal-fired power plants generate additional revenue, increase liquidity in short-term electricity markets, and help distribution companies in short-term states get cheaper power, the ministry said in Friday’s draft proposal.
“It is in the best interests of consumers to keep electricity tariffs as low as possible,” said the letter to Indian states’ energy departments and heads of federal government-run utilities such as NTPC Ltd.
Such a move would allow federal government-led power generators such as NTPC to “sell power in any mode” after distribution companies negotiate an agreement upon termination of office, the ministry said.
Energy Minister RK Singh and Finance Minister Nirmala Sitharaman have previously said they plan to shut down old coal-fired power plants. The Ministry of the Environment has also pushed for the closure of coal-fired power plants, which are responsible for 80% of industrial pollution in India, if they fail to comply with green laws.
The outcome remains unclear. The Department of Energy has requested comments from the states and the heads of federal government-run power generators. A final decision on the proposal is not forthcoming.
A senior official from the Department of Energy said on Sunday that only inefficient factories would be closed.
“Cost-effective facilities that provide cheap electricity are still allowed to work. Small, inefficient factories will be closed, ”the official said.
Distribution companies operated by states like Punjab, Delhi, Andhra Pradesh and Odisha want to surrender the power allotted by the federal government-run utilities after the factories have been completed for 25 years, the Energy Ministry said.
The states cited reasons such as the availability of excess power and high electricity costs as reasons for surrendering the power allocated to them under the agreements.
A list drawn up by the Ministry of Energy in 2019 shows that distribution companies wanted to surrender electricity generated by utility companies with a capacity of 5.75 gigawatts.