Cabinet Revises SHAKTI Policy to Boost Power Sector

Cabinet Revises SHAKTI Policy to Boost Power Sector

Why in the News ?

The Cabinet Committee on Economic Affairs (CCEA) has approved fresh coal linkages under a revised SHAKTI policy to reduce coal import dependency, promote thermal capacity addition, and ensure long-term coal supply amid record-high power demand.

Cabinet Revises SHAKTI Policy to Boost Power Sector

About the SHAKTI Policy Revision and Coal Procurement:

  • The revised SHAKTI (Scheme for Harnessing and Allocating Koyala Transparently in India) policy eases procedures for coal procurement by thermal power plants.
  • It offers two coal linkage windows:
    • For central government generators at notified prices.
    • For greenfield projects and others at a premium above notified prices.
  • Coal India Ltd and Singareni Collieries Co. Ltd will implement the revised policy.

Key Objectives and Benefits of the Policy

  • Aims to reduce coal imports, strengthen energy self-reliance, and promote capacity addition at pithead sites (near coal sources).
  • Encourages the sale of unrequisitioned surplus power under PPAs through power exchanges, increasing market liquidity.
  • Enhances opportunities for DISCOMs and C&I consumers to meet power needs efficiently and cost-effectively.

Context: Rising Power Demand and Infrastructure Push

  • The CCEA move responds to a surge in power demand driven by industrial recovery and rising temperatures.
  • The Cabinet also approved:
    • Expansion of IITs’ academic and infrastructure capacity.
    • Upgradation of the National ITI scheme.
    • Creation of five National Centres of Excellence (NCOEs) for skilling.

Revised SHAKTI Policy – Key Highlights

● Introduces two coal allocation windows:
○ Window I: Linkages to central/state generators at notified prices.
○ Window II: Open auction for all power producers at a premium, with/without PPA.
●Coal India and Singareni Collieries to implement.
●Simplifies process from 8 paras to 2 windows, enhancing efficiency and transparency.
●Enables new capacity addition even without PPAs.
●Imported coal plants can now access domestic coal, reducing import dependency.
●Promotes pithead thermal projects to cut transport costs.
●Grants flexibility and quick policy tweaks at ministry level.
●Boosts energy self-reliance and consumer affordability.