Gas-Based Power Plants Ordered to Operate Amid Rising Electricity Demand

Introduction

With electricity demand soaring across India due to rising temperatures and industrial activity, the Ministry of Power has directed all Gas-Based Generating Stations (GBSs) Gas-Based Power Directive to operate continuously between May 26 and June 30, 2025. This mandate, issued under Section 11 of the Electricity Act, 2003, ensures grid stability and reliable supply during high-demand, non-solar periods. The order overrides previous power purchase arrangements and introduces new operational and tariff norms—requiring GBSs to optimize generation regardless of past dues. Let’s examine the core provisions and their impact on India’s power ecosystem.

Why the Directive Was Issued

Surging demand due to economic growth and extreme summer heat
Forecast by IMD predicting above-normal temperatures until June 2025
Previous shortfalls during non-solar hours prompted grid instability
Following earlier similar orders for imported coal-based stations, this ensures full use of available gas capacity

Key Mandates for Gas-Based Generating Stations (GBSs)

1. Mandatory Operation Window

All GBSs must generate power from May 26 to June 30, 2025, as per directions from GRID-INDIA.

2. Advance Notification

GRID-INDIA will:

Inform plants of high-demand days 14 days in advance
Guarantee dispatch at minimum 50% capacity round-the-clock

Requisition and Scheduling Rules

GBSs must first offer power to PPA holders (as per agreements)
If PPA holders fail to schedule power:
- Offer to other PPA holders
- If unutilized, offer to other distribution licensees
- If still unscheduled, offer on power exchange markets
- GRID-INDIA may use any surplus capacity for grid support

Tariff and Pricing Mechanism

1. For GBSs with PPAs

Offer power at Energy Charge Rate (ECR) set by the Appropriate Commission
Realizations above ECR will first cover fixed costs

2. For GBSs without PPAs

Offer power at benchmark ECR set by a dedicated five-member committee
Benchmark includes costs of:
- Natural gas
- Transportation
- Boil-off loss, insurance, customs, VAT, and re-gasification
Rates will be reviewed every 15 days

3. In Power Markets

Power to be offered at no more than 120% of ECR plus applicable intra-state transmission charges

4. For Grid-Support Dispatches

GBSs will be compensated at their offer price

Payment and Security Mechanism

Weekly payments required by procurers
Rebate rules as per CERC norms or PPAs, whichever is higher
Payment security under Late Payment Surcharge Rules, 2022
Payment for GRID-INDIA-dispatched power will come from a statutory pool

Previous dues will not hinder dispatch; such dues will be resolved separately

Override of Existing Contracts

The order supersedes conflicting PPA clauses, ensuring national interest is prioritized over individual agreements.

Reporting and Oversight

Generators must file weekly reports with GRID-INDIA
GRID-INDIA to issue a detailed implementation procedure within 7 days of this directive (i.e., by May 23, 2025)

List of Key GBSs Covered

The order includes both central sector and state sector GBSs such as:

NTPC Plants in Faridabad, Gandhar, Kawas, Anta, Auraiya, Dadri
RGPPL, Pragati, GSECL, GAMA, Tata Power Trombay, and others
IPPs like Sravanthi, Konaseema, Vemagiri etc.

Conclusion

The mandatory operation of GBSs from May 26 to June 30, 2025, is a decisive step to meet peak power demand and safeguard grid integrity. By invoking Section 11 of the Electricity Act, the Ministry has ensured full generation capacity is tapped during critical summer months. GBS operators, distribution licensees, and market participants must act quickly—plan gas procurement, honor market schedules, and follow GRID-INDIA’s operational timelines. The power sector must now function as one unit to prevent outages and maintain stability.

Download: Gas-Based Power Directive Enforced for Summer 2025