Coal Plant Output Reform Delayed As Compensation Rules Awaited

New Delhi, Mar 25 (KNN) India has deferred by a year its plan to enable coal-fired power plants to lower output during periods of high solar generation, as regulators work on a compensation framework for the additional costs of retrofitting and maintenance.

Delay Due To Pending Compensation Framework

As per a report in financial daily Business Standard, the delay has happened due to absence of clear rules to compensate thermal power plants for reducing their minimum operating level from 55 percent to 40 percent.

The report cited the  discussions involving the Central Electricity Authority (CEA) and other stakeholders in this regard.

Renewable Integration Challenges And Cost Implications

The move assumes significance as India expands renewable energy capacity, particularly solar, while facing challenges in grid integration and transmission infrastructure.

Limited flexibility in coal-based generation has led to instances of solar power curtailment, raising concerns over inefficient utilisation of clean energy investments.

Analysts have warned that inadequate flexibility in coal generation could increase emissions, inflate system costs, and undermine renewable energy gains.

According to energy think tank Ember, compensation to solar generators for curtailed output could reach up to USD 76 million for the eight months ending December, with costs likely to be passed on to consumers.

Industry Concerns And Policy Review

At the same time, retrofitting coal plants to operate at lower loads is estimated to increase tariffs by Rs 0.28 to Rs 0.60 per unit, significantly lower than battery storage costs of Rs 5.76 to Rs 6.04 per unit, making flexible coal a relatively economical option for grid balancing, CEA noted.

State-run power producer NTPC Limited has raised concerns over accelerated wear and tear of equipment at lower operating levels and called for detailed studies before implementing the changes.

However, CEA officials indicated that international experience shows coal plants can operate safely at lower loads with proper retrofitting.

The plan, first introduced in 2023, is also less ambitious compared to efforts in China, where minimum utilisation levels for coal plants have already been reduced to 25–40 percent to support renewable integration.

Officials from the power ministry, CEA, regulators, grid operators, and industry bodies have agreed to further study the cost implications and operational impact before finalising the framework.

(KNN Bureau)