Hits and Misses in Power Sector: A Throwback to the Last Decade


With an unparalleled amplification in the wind and solar capacity in the last few years, today India stands at the forefront of RE (renewable) power development. Moreover, as of 2018, we stand third when it comes to global electricity production. From generation, to addition in the country’s overall transmission capacity and reforms in distribution, the last decade has been very eventful. If we have a closer look at the comprehensive performance of Indian power sector, it won’t be inaccurate to call this a decade of mixed-bags. With each one of us already stepping aboard on a journey of a new decade, let’s have a look at some of the hits and misses for the Indian Power Sector.

green energy
power sector


The Hits:
1.  The success of UDAY: Launched in 2015 by the Government of India, the Ujjwal DISCOM Assurance Yojna (UDAY) was announced to resolve the prime challenges in power distribution. The aim was to lessen the financial burden on state DISCOMs in a 2-step phased manner (over 2016 – 2018). As per the latest progress report released by the Government, the states of Rajasthan, Andhra Pradesh, Haryana, Maharashtra and Gujarat have shown positive turnaround and encouraging results under UDAY. Over a period of three years (2016 to 2018), the states have shown improvement by reducing the AT&C losses from 20.74 % to 18.72%. Moreover, the revenue deficit (ACS-ARR gap) has been narrowed by 42 paise per kWh to Re 0.17 per kWh in fiscal 2019. These numbers paint a promising picture.

2.  Policies and Regulations: The reform processes for a series of continued improvements in the power supply scenario has been an ongoing process. The Government and regulatory bodies pushed a series of schemes like the Integrated Power Development Scheme (IPDS), Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY), Pradhan Mantri Sahaj Bijli Har Ghar Yojana (SAUBHAGYA) with the sole aim of increasing the rate of electrification in the country. It was a commendable achievement for the Government of India when every village of India was declared electrified on 28th April 2019.

3.  Growth in India’s Renewable Capacity: The last decade witnessed major growth in renewable energy capacity. India has set a target of achieving renewable energy capacity of 175 GW by 2022 as part of its Paris Agreement commitments. By the end of 2019, we had already established 83 GW of renewable energy, with an additional 29 GW of green energy under installation. With this pace, the difficult target seems achievable in the coming few years.
The Misses:
1.  Few Misses in the UDAY Scheme: Although the UDAY scheme showed quiet a few successes, a detailed look at the state-level analysis highlights few misses as well. At the end of the decade, there were only 7 states that managed to be below the targeted level. For rest of the states, the AT&C losses have shown a rise to 19.77%.  As per the latest data by the power ministry, 14 states remain with a revenue gap higher than that of the national level.

2.  Although the last decade saw a rapid growth in the transmission sector, the financial health of state electricity utilities continues to be the critical issue when it comes to the sector’s viability.

3.  Higher Solar Tariffs: With lots of efforts towards strengthening the green energy portfolio on India, the higher solar tariffs as compared to that of thermal power remain to be an issue (as high as Rs 7 per unit). Due to this, many State Electricity Boards have started to go for cheaper power from power exchanges. This has put the country’s focus towards a sustainable energy source in jeopardy.

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