Ministry Of Power’s Draft Guidelines To Boost PSP Development And Power Transmission Through PSU Involvement

Introduction

The Ministry of Power in India has recently introduced draft guidelines aimed at catalyzing the development of Pump Storage Plants (PSPs) and enhancing the efficiency of power transmission through the involvement of Public Sector Undertakings (PSUs).[1] These guidelines are part of a broader strategy to meet India’s growing energy demands and support the integration of renewable energy into the national grid. The government’s approach emphasizes a transparent, fair, and standardized procurement framework while leveraging the strengths of both public and private sector entities.

Explanation

1. Promoting Pump Storage Plants (PSPs) through Competitive Bidding: The draft guidelines propose a robust framework for the development of PSPs, which are crucial for energy storage and grid stability, especially in the context of renewable energy integration. To ensure transparency and fairness, the guidelines advocate for the procurement of storage capacity or stored energy from PSPs through open competitive bidding. This approach aims to balance the risks among stakeholders, thereby encouraging more participants to invest in PSP development. By setting clear guidelines, the government intends to create a level playing field, making the process attractive to both public and private players.

2. Inclusion of PSUs in Tariff-Based Competitive Bidding (TBCB) for Power Transmission: In a significant policy shift, the draft guidelines propose allowing PSUs, including Central Public Sector Enterprises (CPSEs), State Public Sector Undertakings (SPSUs), and their joint ventures, to participate in the competitive bidding process for power transmission projects. Traditionally, this space has been dominated by private sector companies, but the inclusion of PSUs is expected to enhance competition, bring in technical expertise, and ensure more efficient project execution. This move is especially crucial for the development of a robust transmission infrastructure, which is necessary to support India’s ambitious renewable energy targets.

3. Ensuring a Level Playing Field and Addressing Conflicts of Interest: To maintain the integrity of the competitive bidding process, the guidelines stress the importance of creating a level playing field for all participants. PSUs will be required to adhere to the same terms and conditions as private sector bidders, ensuring fairness in the bidding process. Additionally, specific conditions have been outlined to prevent any conflicts of interest that could arise from the participation of PSUs. These measures are designed to preserve the transparency and competitiveness of the TBCB process while allowing public sector entities to contribute effectively to the development of transmission infrastructure.

4. Stakeholder Consultation and Finalization: The draft guidelines are currently open for consultation, with the Ministry of Power inviting feedback from industry stakeholders. The inputs received will be considered before the guidelines are finalized. This inclusive approach ensures that the guidelines are well-rounded and address the concerns of all stakeholders involved in the power sector.

Conclusion

The Ministry of Power’s draft guidelines represent a forward-looking approach to strengthening India’s power sector, particularly in the areas of Pump Storage Plant development and power transmission. By involving PSUs in the competitive bidding process, the government aims to leverage their expertise and resources to enhance the efficiency and reliability of the power transmission network. This policy shift is expected to promote greater competition, lead to more cost-effective project execution, and support the integration of renewable energy into the national grid. As the power sector continues to evolve, these guidelines will play a crucial role in shaping the future of India’s energy infrastructure.

[1] https://powermin.gov.in/sites/default/files/webform/notices/Draft_TBCB_PSP_Guidelines.pdf