Union Cabinet approves to allow flexibility in using domestic coal to reduce power generation cost

May 5, 2016 16:10 IST

The Union Cabinet chaired by the Prime Minister Narendra Modi on 4 May 2016 approved to allow the flexibility in optimal use of domestic coal to reduce cost of electricity generation and purchase.

It will leverage coal to electricity conversion and also optimize the transportation cost.

Objectives of the Proposal

• This would create new thrust in promoting efficiency, optimum utilization of natural resources as well as overall economic benefit in the power sector in the country.

• This proposal is also in line with the UDAY scheme of Union Government.

• It will result in coal transportation cost reduction as well as savings in energy used for transportation and may also result in removal of congestion of Railways network.

• This will also be a more environment friendly arrangement as less coal will be used to produce more power and also the distance for transportation of coal would be optimized.

• It envisages that all the long term coal linkages of individual State Generating Stations shall be clubbed and assigned to respective states or state nominated agency.

• Similarly coal linkages of individual Central Generating Stations (CGS) shall be clubbed to enable the efficient coal utilization amongst end use generating stations.

• In case of use of coal in State or Central Generating Plants, the deciding criteria shall be plant efficiency, coal transportation cost, transmission charges and overall cost of power.

• In case of use of coal assigned to the State in Private Generating Stations, power through substituted coal shall be procured on bidding basis from amongst the competing private sector plants.

Background

The Coal is the main source of power generation in the country.

There are broadly two categories of coal based Thermal power plants:

      i. Pit Head based plants, which are situated near coal Mines and

      ii. Load centre based plants situated near load centres.

Power Plants are having different efficiency levels for conversion of coal to electricity depending upon their technology, unit capacity etc.

At present, there are situations where efficient power plants have shortage of coal while some other Power Stations have adequate coal available with them because of less capacity utilization.


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