Coal, thermal power to benefit from introduction of ‘Time of Day’ tariffs in India

In a move that is likely to benefit thermal power producers and coal manufacturers in India, power minister Raj Kumar Singh today said that efforts are being made to move towards ‘time of day’ tariff system to balance the interest of traditional and emerging power sectors.

“We must understand that renewables cannot help us meet base demand,” Singh said today on the sidelines of a conference. “Solar (equipment) will make power when the sun is there, wind (mills) will generate power when the wind is there..

“At night, there will be no sun. So we have to depend on coal power,” the minister added.

The minister said that under ‘time of day’ pricing, prices will be allowed to go higher when suppliers are less, such as at night, when solar farms are no longer supplying power to the grid.

“The prices will be higher at night and during peak hours,” he said.

It is also possible to introduce ToD pricing at the consumer level, thanks to smart meters.

Generally, the ‘peak hours’ for power consumption in India is in the evening, even though daytime loads can also be considerable during the summer months.

RK Singh’s comments come in the wake of rising competition faced by coal-based power producers from renewable power producers such as solar farms and wind farms.

At present, long-term power supply agreements do not take time of day into consideration. However, short-term power supply, or merchant power, is based on demand and supply and sees price changes based on supply and demand.

Long-term tariffs for solar power have fallen to Rs 2.44 per unit — something that suppliers of coal-based power will barely be able to compete with.

ToD pricing will allow power distribution companies to pay a higher price to coal-based power plants at night, in a way compensating them for business lost due to competition from solar power producers during the daytime.

India, which has around 150-200 GW of thermal power generation capacity, has aggressive plans to add solar power generation capabilities.

Last year, the country 5.53 GW of solar power capacity. This year, the target is to add 10 GW, before raising it to 20 GW of addition per year.
The country is uniquely positioned to generate solar power due to high demand and high supply of the chief raw material – sunlight.