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Centre May Invoke Emergency Powers to Run Imported Coal Plants at Full Capacity This Summer

Anticipating a sharp rise in electricity demand during the upcoming summer months, the government is likely to direct select imported coal-based power plants to operate at full capacity. The move may be carried out under special provisions of the Electricity Act, 2003, aimed at ensuring grid stability during extraordinary situations.

Sources indicate that the directive could be issued under Section 11 of the Act, which empowers the Centre to instruct power generation companies to run and maintain their plants as per government requirements during critical conditions. While India has around 17 GW of imported coal-based capacity spread across 15 plants, the directive is expected to apply only to a limited number of facilities. Among those under consideration is Tata Power’s 4,000 MW Mundra plant.

These plants are considered crucial in meeting peak electricity demand, which is projected to reach around 271 GW this year—significantly higher than last summer’s peak of 243 GW. Their role becomes particularly important during periods of high consumption driven by extreme temperatures.

However, electricity generated from imported coal tends to be more expensive compared to domestic fuel-based generation. To address this, the government may allow these plants to pass on increased fuel costs by permitting tariffs higher than those agreed upon in existing power purchase agreements, ensuring financial viability for operators.

The Centre has relied on similar measures in recent years to manage surges in power demand, especially during intense summer periods. Last year, however, peak demand remained below projections due to relatively mild weather and early monsoon conditions.

With demand expected to rise this year, authorities are also exploring ways to optimise the cost structure of imported coal-based generation, while maintaining reliable power supply across the country.