Growth needs more electricity

Context: 

Electricity consumption is Important indicator of Economic growth, to some extent enhancing the production of capital, labor and technology; economic growth can in turn increase the demand for electricity consumption, which indicates the inherent relationship between them. 

More on News:

• The Central Electricity Authority (CEA) projects India’s electricity demand to increase 1.8 times between 2021-22 and 2031-32. At this rate, India’s annual per capita electricity consumption will be about 1,700-1,800 units in 2031-32.  
• As of 2017, India’s per capita electricity consumption was significantly lower than most developed countries.
• Under the Paris agreement, India updated NDC to achieve about 50 percent cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030. 

Power Sector at a Glance ALL INDIA:

• Total Installed Capacity 4,17,668 MW.(As on 31.05.2023 Source-CEA)
• Installed GENERATION CAPACITY(FUELWISE) Fossil Fuel -2,37,269MW (56.8%) in which Coal and Lignite has largest share 50.7%,
• India’s journey towards a greener future has gained global recognition.Today, India stands 4th globally in Renewable Energy Installed Capacity, with 43% of its total installed electricity capacity (175GW) coming from non-fossil energy sources.(Solar 16.1% and Wind-10.3%).

Challenges In Power Sector:

• Policy and Regulation of sector
  • Electricity is listed in a ‘concurrent list’ in seven schedules, therefore there is lack of coordination and cooperation between center and states.
  • Government subsidy and cross-subsidy from industrial and commercial consumers attempt to keep electricity affordable for residential and agricultural consumers.  
  • For example, in 2019-20, while 21% of the total electricity supply was sold to agricultural consumers, their share in the total revenue was only 2%.
• Generation:
  • India missed capacity addition targets for almost all major energy sources for the 2017-22 period (up to March 2022).  
  • In spite of the renewables push, coal still accounts for about 50% of India’s installed power capacity. That means a simultaneous demand and supply shock due to shortage of coal and critical challenges in the coal sector.
  • CEA identified land acquisition, fund constraints with contractors, and contractual disputes as some key issues leading to delays.  
  • No nuclear generation capacity was added during the last five years.
• Transmission: The country’s weak transmission grid remains a serious hurdle.
  • Every year, hundreds of renewable energy projects are forced to halt in the advanced planning phases due to transmission line upgrade delays and associated costs
    • For example: A planned approach to build huge solar plants in Leh was recently cancelled due to a lack of transmission infrastructure.
  • Transmission lines overloading :Due to higher loads during peak hours, transmission lines frequently experience issues. 
• Distribution: Discoms are the weakest link in India’s Power sector. 
  • Discoms continue to register financial losses, technical and commercial losses remain high. (Refer-Image).
  • Although private participation is permitted, their presence among discoms is limited. (State owned DISCOMS-93% share).
• Climate Finance and decarbonization:
  • India’s pledge at the COP-26 summit to have 500 GW of non-fossil generation capacity by 2030.  These will require investments of about Rs 32 lakh crore. 
• Underutilization of Renewable Energy Potential:
  • The National Electricity Plan (NEP) projects a compounded annual growth rate (CAGR) of 7% in energy demand from FY22 to FY27.
  • To achieve sustainable growth, the revised energy mix places greater reliance on solar energy. 
  • The report estimates that the pace of solar installations will need to double to over 30 GW per year to meet the NEP targets.

Way forward:

• Regulation and Policy:
  • The state governments should promote autonomy, competence, and transparency of the State Electricity Regulatory Commission (SERC).

• • Subsidy Structure: Many states provide subsidised and sometimes free electricity for agriculture. The status quo with subsidies that are financed using deficits and debt need reforms. 
• Decentralized Power Generation:
  • The transition from centralised power plants to decentralised power plants, which means that energy is now created, stored, and delivered.
  • Separation of Feeders: Some states, with large agricultural consumer bases such as Rajasthan, Andhra Pradesh, Gujarat, Karnataka, and Maharashtra, have reduced leakages by separating feeders for agricultural use from non-agricultural use. 

• Reforms In Coal Sector: Increase Production and competition leveraging producing mines to enable more world-scale operation.
• Privatization of Discoms: 
  • In Delhi, after power distribution was taken over by three private licensees, the Aggregate Technical and Commercial (AT&C) losses have come down from about 55 percent in 2002 to about 9 percent in 2019. 
  • Make a suitable case for privatization to enhance efficiency and reduce financial losses.
  • Other reforms include Reducing power procurement costs, Billing efficiency, Collection efficiency and Agricultural demand management.
• Renewable Energy Integration Reforms:
  • There is news to show urgency of timely completion of tendering processes, risk mitigation during execution, and strengthening the domestic solar supply chain to successfully reach the capacity targets.
• Technology Upgradation:
  • Intelligent metering and a digital network infrastructure allow consumers and utility companies to monitor and better control allowing for more efficient consumption and cost management.

Source: Business Standard

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