MoP’s Scheme for Pooling of Tariff for Plants with Expired PPAs

The Ministry of Power (MoP) has notified the ‘Scheme for Pooling of Tariff’ for plants whose power purchase agreement (PPAs) have expired. According to the notification, in view of long gestation period required for the construction of new thermal capacities and impending retirement of old inefficient thermal plants, it would be prudent to continue to operate the existing efficient thermal capacities of Central Public Sector Undertakings (CPSUs) whose PPAs have expired, but have remaining operational life, deferring the capital expenditure required for creation of new capacities. lt is required to ensure continued operation of these gas-based power plants to provide peaking and balancing power for smoother and affordable energy transition towards renewable energy and for resource adequacy.

As the stations with more than 25 years have their capex recovered, fully depreciated, debt free, Fuel Supply Agreement (FSAs) in place, and well-maintained, power at competitive tariffs can be made available to the beneficiaries from these stations. Accordingly, to utilise these capacities, it has been decided to pool power from all Central Generating Station (CGSs) whose PPAs have expired and such pooled power shall be made available to willing beneficiaries. The willing beneficiaries will have to enter PPA for a duration of a minimum of 5 years. Discoms not finding value in pooling will be able to opt out from the pool after 5 years.

The measure will ensure availability of adequate resources in the grid for balancing, and flexing and re-distributing benefits such as reliability, cost effectiveness among the beneficiaries. A detailed mechanism in this regard will be finalised after consultation with states and other stakeholders. All the concerned organisations shall take necessary action to implement the scheme with effect from July 1, 2023.

The policy document may be accessed here