The Indian power sector is witnessing rapid overhauling and innovation in light of the increasing green energy targets of the Indian government and industry alike. However, the sector continues to face certain challenges that need to be addressed. These include the rising dues of renewable energy producers, financing limitations, hike in electricity prices and lack of established energy storage technologies. As a result, the government has taken several steps to diversify the country’s energy mix with an increasing share of non-fossil fuel technologies. The Union Minister for Power and New and Renewable Energy Raj Kumar Singh’s recent written replies in the Lok Sabha and Rajya Sabha provide key insights on the status and progress of the power and renewable energy sector in India as well as the future outlook. The minister also recently addressed a gathering to mark the National Energy Conservation Day. Excerpts…
On the progress of renewables
Electricity is available for about 22 hours per day in villages and 23.5 hours in cities across the country. The availability of power in rural and urban areas has increased significantly in comparison to 2014. One of the priorities of our government is to provide universal energy access at affordable prices and on a 24×7 basis. In recent years, India has made significant progress in village electrification, providing electricity connections to households. We have brought about total transformation in the past five years by adding 142 GW of generation capacity, connecting the entire country to one grid, and achieving the vision of one grid, one market. India has transformed from an energy-deficit to an energy-surplus nation.
The transformation is not just in capacity, but also with respect to the energy mix, energy intensity and emission intensity. India has achieved the Nationally Determined Contribution target of having 40 per cent energy production from non-fossil sources. This achievement has happened way in advance of our target date. We have one of the lowest per capita emissions in the world and in absolute terms it is 3 per cent of the total emissions.
Convergence Energy Services Limited has also been successfully running the Gram Ujala scheme. Under the scheme, a target of distributing 1 million LED bulbs in five states was achieved. Distributed in rural areas of Uttar Pradesh, Bihar, Karnataka, Telangana and Andhra Pradesh at a highly subsidised cost of Rs 10 in exchange for working incandescent bulbs, LED bulbs herald significant energy savings as well as savings for consumers. The Bureau of Energy Efficiency (BEE) has also contributed to carbon dioxide savings of around 300 million tonnes under its various schemes like Perform, Achieve, Trade (PAT). After the second round of PAT, we have achieved emission reduction of 66 million tonnes per annum.
We are aiming to achieve 175 GW of renewable energy by 2022. Of this, 150 GW has been installed while 63 GW of renewable energy capacity is still under development. The decoupling of growth and energy consumption has happened and we have to push harder.
On dues of renewable energy producers
The rising dues of renewable energy producers have not been paid by discoms. As a result, no investment will come in the sector if investors find that power bills are not being cleared. It is a matter of worry because the quantum is Rs 150 billion-Rs 160 billion. The total overdue amount of discoms towards renewable energy producers stood at Rs 190.13 billion as of October 31, 2021, which constitutes 20 per cent of the total amount of overdues of Rs 939 billion. The overdue amount of Rs 190.13 billion is 11.8 times the average monthly billing of renewable energy producers. Andhra Pradesh utilities owe the maximum amount of overdues to producers at Rs 62.7 billion, followed by Tamil Nadu at Rs 32.15 billion and Telangana at Rs 21.59 billion. Renewable energy producers are very important in the context of COP26 and India’s target of 500 GW non fossil-fuel energy by 2030. No investment will come if they find that power is not paid for. That is compelling us to take more stringent action to ensure that energy bills are paid. The power ministry is adopting a robust payment security mechanism for power producers so that energy bills are paid well in time.
On energy storage, off-grid and decentralised solar
Research and development in the field of renewable energy including energy storage technology in the country is carried out at various research institutes, universities, laboratories and industries. A National Centre of Photovoltaic and Research and Education at IIT Bombay has developed lithium-ion and sodium-ion batteries. The Off-grid and Decentralised Solar PV Applications Programme provided financial support, primarily to public service institutions, for the installation of battery-backed off-grid solar power plants or packs. Till date, 216.9 MWp of capacity has been installed under the programme.
On steps taken to avoid the electricity price hike
The series of steps taken by the Indian government has helped avoid any electricity price hike in the recent past. The liquidity infusion scheme through the PFC Limited and REC Limited as a part of the Aatmanirbhar Bharat Abhiyan was announced. Under this, REC and PFC are extending special long-term transition loans to discoms for up to 10 years. As of December 7, 2021, PFC and REC have disbursed Rs 1,033.87 billion to various discoms. This has reduced the burden of late payment surcharge (LPS) of the discoms.
The Central Electricity Regulatory Commission, in accordance with the directions issued by the Indian government under Section 107 of the Electricity Act, 2003, had issued an order. As per the order, if any delayed payment by the discoms to the generating companies and interstate transmission licensees beyond 45 days from the date of the presentation of the bills falls between March 24, 2020 and June 30, 2020, the concerned discoms will pay the LPS at the reduced rate of 12 per cent per annum. The Electricity (Late Payment Surcharge) Rules, 2021 notified on February 22, 2021, have reduced the rate of the LPS. This will reduce the financial burden of the discoms. The discoms have been permitted to exit from power purchase agreements with central generating stations that have completed 25 years. This will reduce the power purchase cost of the discoms.
On Revamped Distribution Sector Scheme
The Indian government launched the reforms-based and results-linked Revamped Distribution Sector Scheme with the objective of improving the quality and reliability of power supply to consumers through a financially sustainable and operationally efficient distribution sector. The scheme has an outlay of Rs 3,037.58 billion and an estimated gross budgetary support of Rs 976.31 billion from the central government. The scheme aims to reduce the AT&C losses at a pan-India level to 12-15 per cent and the ACS-ARR gap to zero by 2024-25.
The scheme is effective for five years (2021-22 to 2025-26). The sunset date of the scheme will be March 31, 2026. The scheme has two major components. These are – Part A: Financial support for prepaid smart metering; and system metering and upgradation of the distribution infrastructure, and Part B: Training and capacity building and other enabling and supporting activities. The state governments and discoms are free to undertake customised reform measures and works to meet the specific needs of the state. The release of funds under the scheme has been linked to results and reforms. The pre-qualifying criteria need to be mandatorily met by the discoms before they can be evaluated for release of funds under the scheme. REC and PFC are the nodal agencies, responsible for implementing the scheme across the country.
Recognising that various discoms are at different performance levels (both operationally and financially), the scheme envisages customised action plans as per the needs of the individual discoms instead of adopting a one-size-fits-all approach. The scheme envisages a results evaluation framework, incorporating performance against result parameters and trajectories for improvement.
On information technology interventions in the distribution segment
The information technology (IT) enablement of the distribution segment has remained one of the major focus areas under various centrally sponsored schemes. IT enablement was taken up in 1,260 towns under the Restructured Accelerated Power Development and Reforms Programme (R-APDRP) Part A.
Further, to expand the coverage of IT enablement of the distribution business to non-R-APDRP areas, based on the detailed project reports received from states/utilities, the Ministry of Power approved IT enablement of an additional 1,651 towns under the Integrated Power Development Scheme (IPDS Phase II). The implementation of IPDS Phase II works in these towns has been taken up with the objective to enable discoms to improve consumer satisfaction, monitoring, and carry out effective energy accounting and auditing based on the use of an IT-enabled system.
