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Power Ministry Announces New Rules For Sustaining Economic Viability, Easing Financial Stress

IBEF:  October 25, 2021

Ministry of Power announced a new set of rules intended at sustaining the economic sustainability of the power sector, alleviating the financial stress of various stakeholders and safeguarding timely recovery of costs in electricity generation.

Investors and other stakeholders in the power sector had been worried about the timely recovery of the costs due to adjustment in law, reduction of renewable power and other related matters.

The rules have been classified as Electricity (Timely recovery of costs due to Change in Law) Rules, 2021 and Electricity (Promotion of generation from renewable sources of energy by addressing Must Run and other matters) Rules, 2021. The ministry notified that timely retrieval of the costs with the shift in law assumes significance as the investment in the power sector relies on a great extent upon timely payments.

 

The new rules offer that a must run power plant will not be subjected to curtailment or regulation of generation or power supply because of merit order dispatch or any other commercial consideration. For curtailment or regulation of power, the provisions of the Indian Electricity Grid Code shall be observed. Should there be a curtailment of supply from the must run power planet, the buyer would be liable to pay compensation to the must run power plants at the rate listed in the agreement for purchase or supply of electricity.

Also, the ministry informed that a new formula had been offered to calculate modifications monthly owing to the impact of the change of law.

The RE generator is also allowed to trade power in the power exchange and recover the cost suitably. This helps in the realisation of revenue by the generator and also the power is accessible in the electricity grid for use of consumers.

The new rules would assist in accomplishing the target of RE generation, the ministry informed. Moreover, this would guarantee that consumers get green and clean power and in return, ensuring a healthy environment for the future generation.

“Currently, the pass-through under change of law takes time. This affects the viability of the sector and the developers get financially stressed. The rules would help in designing an investment-friendly environment in the country,” it stated.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.