Power Min revises framework to supply cheapest power lot first to consumers

The government has revised the framework for electricity supply to provide the cheapest power lot first to consumers and help state utilities to meet demand in a cost-effective manner.

The power ministry has revised the structure of the Day-Ahead National level Merit Order Despatch Mechanism to lower the overall cost of electricity generation, which will translate into lower power prices for consumers, an official statement said Wednesday.

As per the revised mechanism, the cheapest generating resources (power) across the country will be despatched (supplied) first to meet the system demand.

The gains out of the proposed Day-Ahead National Merit Order Dispatch Mechanism would be shared between generating stations and their consumers.

This will result in increased annual savings for electricity consumers. The existing mechanism of merit order dispatch in real-time was made operational in April 2019. The mechanism optimised the total variable cost of generation pan-India while meeting technical and grid security constraints.

The existing mechanism resulted in a reduction of variable cost on a pan-India basis to the tune of Rs 2,300 crore and these benefits were being shared with generators and their beneficiaries, ultimately reducing the cost of electricity to consumers.

The revised mechanism will also enlarge the scope of the present system by including all the regional entity thermal power plants and subsequently all the intra-state thermal generators.

This will also help the states in maintaining resource adequacy in a cost-effective manner with less carbon footprints.

The Day-Ahead National Merit Order Dispatch Mechanism will be implemented by CERC through the necessary regulatory process and it will be operated by GRIDINDIA at the national level.

Since, 2014, the government has added 184.6 GW of additional generation capacity and 1,78,000 ckt km (circuit kilometres) of the transmission line to connect the whole country into one grid, which has transformed the whole country into one integrated electrical system.

The power ministry has been taking several measures to enhance the competition in the sector with the objective of lowering the cost of electricity to consumers.