National Merit Order List For Electricity Generation To Help In Reducing Power Cost

National Merit Order List For Electricity Generation To Help In Reducing Power Cost

In continuation of its efforts to reduce the cost of electricity generation in the country, the ministry of power has released a scheme for increasing flexibility in generation and distribution of electricity. Its main objective is to reduce the cost of power to consumers by provisioning power at lower costs from areas of excess supply. By not binding producers to supply power from a specific geographical area, the move creates surplus value by lowering costs. This process also involves the inception of a national merit order list, which would rank sources of power in ascending order of price and, thereby, provision power at the lowest cost to each discom. The surplus on each unit of production is to be shared equally between thermal power stations (TPP) and discoms. The scrapping of region-specific dispatch is expected to increase the efficiency of power generation at the national level.

This scheme is one of many steps the government has been taking for reducing the cost of power to the consumers. In 2016, in a similar move for coal, the government eased geographical restrictions in coal provisioning to reduce unnecessary transportation of coal and involved costs of the same. This move would also optimise utilisation of railway infrastructure for transportation of coal from mines to generation plants. In April 2018, the government allowed for substitution of renewable power for thermal power if it was possible, to ease the pressure on non-renewable sources like coal. Along with reducing emissions, the lower cost of renewable energy generation helped minimise overall cost of electricity generation for TPPs. Read more

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