The C-Suite Intelligence

India Union Budget 2025 Budgetary Allocations For Ministry Of Power

By  Nitika Sharma , Shreyanshi Pandey , Mansi Singh
• 1 min read

INDIA UNION BUDGET 2025 -26

  • Investment in energy conservation schemes exceeds the previous year’s expenditure by 77.4% indicates a growing recognition of the importance of sustainability and energy efficiency. It reflects an increasing commitment to addressing energy consumption and environmental impact, as businesses or governments allocate more resources to advanced technologies, renewable energy, and energy-saving initiatives.

  • The significant cut down in the budget allocation for the transmission system in Arunachal Pradesh for 2025-2026 from 1315.01 Cr to 0.01 Cr could be attributed to several factors, such as the potential completion of key ongoing projects, enhancements in grid infrastructure and budgetary limitations due to other state priorities. This suggests that substantial investments in the transmission network have already been made, reducing the need for significant additional funding in the upcoming budget.


  • Hike in the budget for the Power System Development Fund indicates budgetary support for upgrading transmission lines, grid modernization, implementing smart grid initiatives, strengthening distribution network etc. Expenditure on scheme for power system development fund has seen a jump of 60% in budget 2025 – 2026 as compared to the budget 2024-2025. Transfer to Power System Development Fund has also seen the rise this year as compared to the last budget this aligns with the goal to strengthen the Power System of the country.


  • More investment in reform-linked distribution schemes indicates a focused effort to enhance the efficiency and reliability of power distribution systems. It reflects a commitment to modernizing infrastructure, improving service delivery, reducing losses, and ensuring better financial health of distribution utilities. These reforms often involve upgrading technology, improving metering and billing systems, and implementing performance-based incentives, all aimed at creating a more sustainable and transparent power distribution system. Such investments typically seek to reduce power outages, ensure equitable access, and foster long-term economic growth in the energy sector.


    In budget 2025-2026 a hike of 27% is seen that shows the government focus on the betterment of the power sector by taking the needful reforms with the aim of high results.

  • Central Assistance for Pakul Dul HEP under J and K PMDP 2015 as grant to CVPPPL and grant towards the cost of downstream projection work od Subansiri Lower Project (NHPC) have seen a significant decrease i.e. from 568.68 Cr to 300 Cr that accounts to 47.24% and from 51.98 Cr to 13 Cr that accounts to approx. 75% decline respectively.


  • Significant decrease of expenditure fund is seen in other public sectors also i.e. Support for flood moderation storage – Hydro Electric project (33.4%), Payment pertaining to International Arbitration Case (58.3%) and Manufacturing Zones under Atmanirbar Bharat Package (75%).


By  Nitika Sharma , Shreyanshi Pandey , Mansi Singh

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TBCB GUIDELINES FOR PROCUREMENT OF STORAGE CAPACITY – INDIA

Analysis of Ministry of Power Resolution of TBCB Guidelines for Procurement Storage Capacity & Stored Energy from PHSP

DESCRIPTION OF THE RESOLUTION

Tariff-Based Competitive Bidding Guidelines for the procurement of storage capacity or stored energy from Pumped Storage Plants (PSPs), issued by the Ministry of Power (MoP), India aims to support India's energy transition by enhancing grid stability, integrating renewable energy sources, and reducing peak-time electricity costs. The guidelines establish a transparent, standardized framework for procurement, ensuring fair risk-sharing among stakeholders, including developers, procurers, financial institutions, and regulatory bodies.

Key provisions include bidding structures, financial eligibility criteria, performance guarantees, and contract terms. The document also outlines the technical requirements, project timelines, and tariff structures for PSP development. Additionally, it highlights environmental considerations, land acquisition policies, and social impact assessments. By defining clear regulatory processes and dispute resolution mechanisms, these guidelines aim to attract investment, improve energy security, and drive long-term sustainability in India's evolving power sector.

The policy supports the National Electricity Plan 2023, which projects a need for 27 GW of PSP capacity by 2031-32. It enables cost-effective peak load management, reduces carbon emissions, and encourages public-private partnerships (PPPs) to accelerate storage infrastructure development while balancing economic and environmental factors.

ENERGY FLOW & ECONOMIC BENEFITS OF PHSPs


FINANCIAL FLOW & INVESTMENT REQUIREMENT - PHSP

The policy supports the National Electricity Plan 2023, which projects a need for 27 GW of PSP capacity by 2031-32. It enables cost-effective peak load management, reduces carbon emissions, and encourages public-private partnerships (PPPs) to accelerate storage infrastructure development.

ENVIRONMENT & SOCIAL IMPACT

KEY IMPACTS

Pumped Storage Plants (PSPs) play a crucial role in reducing carbon emissions by integrating renewable energy and minimizing reliance on fossil-fuel-based power generation. However, their development comes with environmental and social considerations.

PSPs require large reservoirs, which can lead to land acquisition challenges, deforestation, and ecosystem disturbances. Water resource management is a key concern, as PSPs may alter river flows and affect aquatic biodiversity. Additionally, local communities near project sites may face displacement and livelihood disruptions, necessitating resettlement plans and fair compensation.

To mitigate these impacts, PSP projects must undergo environmental impact assessments (EIA), adhere to sustainability guidelines, and implement afforestation programs. Proper stakeholder engagement and community development initiatives are essential to balancing economic benefits with ecological and social responsibility.

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Eninrac’s insights upon Recovery of legacy dues in the Deviation Settlement Mechanism (DSM) Pool Account in pursuance of DSM Regulations, 2024. NLDC’s communication reflects ambiguity in the minds of some of the discoms about the order dated 15.10.2024 of the Commission approving the detailed procedure for recovery of charges in case of deficit in the DSM Pool Account. For the sake of clarity and to ensure timely payment of the DSM dues, the Commission clarifies that the methodology approved in the detailed procedure vide the Order dated 15.10.2024 is applicable for recovery of charges in case of the deficits in the DSM Pool Account "as on and from 16th September 2024."

Eninrac Insights: Non-Payment of Dues and Its Impact on Ancillary Service Providers

1. Ancillary Service Providers:

  • Delayed Payments: The non-payment of dues directly leads to delays in compensating ancillary service providers, potentially creating financial stress for entities reliant on timely payments for operational continuity.

  • Erosion of Trust: Persistent delays may reduce trust in the regulatory framework and discourage ancillary service providers from actively participating in the grid security market.

  • Reduced Capacity for Services: Financial uncertainty could limit the ability of ancillary service providers to maintain or scale their operations, affecting their capability to support grid stability during high-demand periods.

2. Grid Reliability and Security:

  • Operational Risks: Ancillary service providers play a critical role in managing grid deviations and ensuring stability. Any financial disincentive may result in fewer ancillary services being available, increasing the risk of grid instability.

  • Emergency Preparedness: In times of peak demand or unexpected outages, the lack of robust ancillary service support could jeopardize emergency response capabilities.

3. Consumers:

  • Service Reliability: A shortage of ancillary services may lead to more frequent and prolonged outages, impacting industries, households, and essential services.

  • Economic Impact: Industries reliant on consistent electricity supply may face operational disruptions, indirectly affecting employment and economic productivity.

4. Distribution Companies (Discoms):

  • Operational Challenges: Discoms might face reputational and operational issues if ancillary service providers refuse or limit their services due to delayed payments.

  • Increased Costs: Discoms may need to resort to more expensive alternatives to manage grid deviations, further straining their financial resources.

5. Regulatory Framework:

Cascading Deficit Issues: Non-payment of dues creates a feedback loop of financial stress, undermining the stability of the DSM Pool Account and necessitating additional interventions from CERC.

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Eninrac Insight: Analysing the impacts of the provided order (Petition No. 11/SM/2024) dated 22nd December 2024, by the Central Electricity Regulatory Commission (CERC) involves understanding the broader consequences on various stakeholders involved in the electricity generation and distribution ecosystem. The impact upon each stakeholder is enlisted as under:

Stakeholders Impact Analysis:

  1. Renewable Power Developers (RPDs):

    • Clarity in Scheduling Modalities: The explicit provision for scheduling infirm power provides much-needed regulatory certainty, enabling better planning for testing, commissioning, and pre-COD injections.
    • Flexibility in Trial Runs: The relaxation on the number of trial run instalments for larger capacity projects (250 MW+) reduces logistical and operational pressures, facilitating smoother transitions.
    • Market Opportunities: The ability to sell power post-successful trial operation after offering it to contracted beneficiaries opens revenue streams for developers.
    • Regulatory Compliance Costs: Compliance with detailed technical standards (e.g., CEA connectivity standards) and requirements for trial run certification may increase administrative and operational expenses.

  2. Grid Operators (NLDCs, RLDCs)

    • Operational Oversight: Clear guidelines for scheduling infirm power pre-COD help RLDCs ensure grid stability, balancing injections during testing phases.
    • Data Management: Increased administrative tasks to maintain detailed records of infirm power injections and associated pre-COD activities.
    • Coordination Demands: Greater interaction with developers and intermediary procurers for certification and scheduling.

  3. Beneficiaries (Discoms, Procurers):

    • First Refusal Rights: Beneficiaries gain priority access to power post-trial runs, ensuring contracted obligations are met.
    • Supply Assurance: Provisions ensure power availability during the pre-COD phase for procurers relying on RE developers.
    • Potential Cost Variations: The inability to respond within stipulated timelines may lead to opportunity losses, as developers could sell power in the market.

  4. Consumers:

    • Grid Stability Benefits: Improved regulatory mechanisms for scheduling and testing enhance overall grid reliability, indirectly benefiting end consumers through fewer disruptions.
    • Long-term Cost Benefits: Streamlined processes for integrating RE into the grid can reduce the cost of renewable energy adoption over time.

  5. Regulators:

    • Alignment with Energy Goals: The provisions support India’s renewable energy targets, ensuring a smoother integration of RE into the energy mix.
    • Policy Iteration Needs: Regular updates to the Grid Code to address operational challenges may require continuous engagement with stakeholders.

Broader Implications:

  1. Market Dynamics:

    • Encourages investment in large-scale renewable projects by ensuring operational and financial predictability for developers.
    • Strengthens the ancillary services market as developers utilize bilateral contracts or market mechanisms like I-DAM/HP-DAM.

  2. Environmental Impact:

    • Accelerates the transition to renewables by simplifying processes for developers, reducing dependence on fossil fuels, and promoting clean energy solutions.

  3. Economic Impact:

    • Enhanced RE integration supports economic growth through job creation in commissioning, operations, and grid management.
    • Potential reduction in system costs from improved grid stability and optimized resource utilization.

  4. Consumers:

    • Grid Stability Benefits: Improved regulatory mechanisms for scheduling and testing enhance overall grid reliability, indirectly benefiting end consumers through fewer disruptions.
    • Long-term Cost Benefits: Streamlined processes for integrating RE into the grid can reduce the cost of renewable energy adoption over time.

  5. Challenges:

    • Enforcement and monitoring of compliance with technical and scheduling norms could pose challenges for RLDCs and regulatory bodies.
    • Delays in amendment processes for Grid Code updates might create temporary ambiguities.
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TBCB Guidelines For Procurement Of Storage Capacity
The C-Suite Intelligence

TBCB Guidelines For Procurement Of Storage Capacity

Tariff-Based Competitive Bidding Guidelines for the procurement of storage capacity or stored energy...

CERC DSM 2024: Suo-Motu Order on Recovery of Legacy Dues and Its Impact on Discoms and Ancillary Services
The C-Suite Intelligence

CERC DSM 2024: Suo-Motu Order on Recovery of Legacy Dues and Its Impact on Discoms and Ancillary Services

Eninrac’s insights upon Recovery of legacy dues in the Deviation Settlement Mechanism (DSM) Pool A...

2024 CERC Cross-Border Trade Amendments: Key Impacts on India’s Electricity Sector and Stakeholders
The C-Suite Intelligence

2024 CERC Cross-Border Trade Amendments: Key Impacts on India’s Electricity Sector and Stakeholders

Eninrac Insight: Analysing the impacts of the provided order (Petition No. 11/SM/2024) dated 22nd De...