Amid growing concerns of a power shortfall this summer, the government has announced a new set of measures to ease coal supply to thermal power plants under a revised SHAKTI (Scheme for Harnessing and Allocating Koyala Transparently in India) policy. The Union Cabinet on Wednesday approved fresh coal linkages for central and state thermal power units, as well as independent power producers (IPPs), to help meet both short- and long-term fuel requirements.
Coal allocation will now be streamlined under two windows: Window I allows linkages to central gencos and states at the notified price, while Window II permits allocation to all gencos, including imported coal-based plants, at a premium above the notified price. The existing mechanism for central-sector plants and state-authorised agencies will continue under Window I.
According to the Central Electricity Authority, peak power demand is projected to rise to 277 GW in 2025-26—up 27 GW from the previous year—and to 334 GW by 2029-30. In 2024-25 alone, India added 33 GW, taking total installed capacity to 475 GW.
Under Window II, domestic and imported coal-based power producers can obtain coal via auction for up to 25 years. This gives them the flexibility to sell power as desired and incentivizes the creation of new thermal capacity. Imported coal-based plants will also be allowed to secure domestic coal, reducing dependency on imports.
The policy encourages greenfield thermal projects at pithead locations and supports brownfield expansion. Coal source rationalisation will also be undertaken to reduce landed coal costs and ease railway logistics, leading to lower tariffs for consumers.
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Directions will be issued to Coal India Limited and SCCL for implementation. The revised policy, which consolidates eight earlier provisions into two windows, aligns with the goal of improving ease of doing business.
