On May 7, the Cabinet Committee on Economic Affairs (CCEA) approved the updated Scheme for Harnessing and Allocating Koyala Transparently in India (SHAKTI), introducing a more efficient system for allocating coal to India’s power sector, which is projected to expand at a compound annual growth rate (CAGR) of 6% through 2030.
The revamped policy introduces two distinct categories: Window-I, which provides coal linkages to central and state-owned generating companies (gencos) at the government-notified price, and Window-II, which offers coal linkages to all gencos at a premium above the notified price.
This significant policy shift, approved under the leadership of Prime Minister Narendra Modi, aims to simplify and streamline the coal linkage process.
A key change under the revised scheme is the removal of the requirement for gencos to have a Power Purchase Agreement (PPA) in place to access coal under Window-II. This is expected to accelerate coal linkages for upcoming thermal power plants, encouraging private players to enter the market, as they will now have the flexibility to sell electricity independently without binding PPAs. Additionally, the government is promoting the development of pithead power plants to minimize coal transportation and logistics challenges.
The new policy framework is also expected to create opportunities for several private firms that have secured commercial and captive coal mines through government auctions, positioning them to establish thermal power plants in the near future.