Centre orders captive power plants to run at full capacity amid high electricity demand

Emergency Rule

The central government has invoked an emergency mechanism to direct around 112 captive coal-fired power plants to run at maximum capacity from October 1 until December 31. This step comes as the country sees an unusual surge in electricity demand this September, with peak demand coming close to levels recorded during peak summer. On September 10, the country's peak power demand hit 269 gigawatts, which is the highest-ever peak demand recorded for this month. For comparison, the peak demand for the entire year so far was 270 gigawatts, recorded during peak summer in May. A captive power plant is a dedicated electricity-generation facility built by an industrial company or a group of factories mainly to supply power for their own use, rather than selling to the public grid.

Rules And Sales

The direction was issued under Section 11 of the Electricity Act, a law that lets the government force power generation during extraordinary situations. This rule applies to all coal-based captive power units with a capacity of 50 megawatts and above. These plants must operate and generate power to the full extent of their available capacity. After meeting their own factory needs, generators must offer their surplus generation through power exchanges following market rules. Plants are also asked to keep enough coal stock to ensure steady fuel supply and smooth operations. Generators must submit a weekly report to the Central Electricity Authority detailing their power generation, factory consumption, power sales, available capacity, and coal stock.

Tata Power Extension

Separately, the power ministry extended the same emergency mechanism for Tata Power's imported coal-based plant, Coastal Gujarat Power Limited, until December 31. This 4-gigawatt plant had been running under this provision since March, and that order was supposed to end this month. Before March, the plant stayed mostly idle for nearly six months because of high fuel costs and a lack of a working power purchase arrangement. Earlier this year, the Gujarat government approved a revised power purchase agreement with the plant, paving the way for long-term supply. A senior government official explained that this emergency rule was extended only for Tata Power's plant because other imported coal units were already working normally and did not face similar challenges.

Causes And Tariffs

Government officials noted that invoking these emergency provisions is not unprecedented, as authorities have used them in past years during peak summer months. Under this setup, a committee led by the Chairman of the Central Electricity Authority decides the tariff for electricity procured from these units by factoring in high imported coal costs. While electricity demand normally drops by September as summer heat fades, consumption stayed unusually high this year. Power sector experts state that this high demand is driven by persistent heat, deficient rainfall, higher irrigation needs, and weather patterns linked to El Niño.