Year-ender: Power . With thrust on renewables, 2021 was a watershed year

For the power sector, 2021 was a watershed year of sorts. To begin with, electricity demand in the summer surpassed 200 gigawatts (GW), suggesting an expanding appetite. Besides, India also displayed its firm commitment to significantly reduce greenhouse gas emissions with a stronger thrust on Renewable Energy (RE), a development that promises to further incentivise and expand the clean energy sector.

The year also accelerated the pace towards increasing the contribution of RE sources in power generation to more than 50 per cent by the end of this decade, as the world’s second largest power consumer pledged to become carbon neutral by 2070. To that end, the government unleashed a slew of reforms and restructuring measures targeted at enhancing efficiency and optimising costs.

One of the most defining reforms is the Power Ministry’s move towards General Network Access (GNA), through which the objective is to accelerate the pace of investments in India’s power generation and transmission segments and encourage a market-determined pricing ecosystem.

Green energy

Another noteworthy development is the introduction of green energy open access. Under this, the State Electricity Regulatory Commissions (SERCs) will have to frame regulations to provide open access to consumers who are willing to consume and pay for energy produced from clean sources like air, water and sunlight.

The Power Ministry has already circulated the draft Electricity (promoting renewable energy through Green Energy Open Access) Rules, 2021, which after receiving comments from stakeholders is being legally vetted by the Ministry.

The rules propose that tariff for green energy shall be determined by the appropriate commission, which may comprise average pooled power purchase cost of RE, cross-subsidy charges and service charges covering all prudent cost of distribution licensee for providing green energy.

With the global investor community closely following the country’s commitment towards a greener world, India began to face the pressure of maintaining the fine balance of achieving its COP26 commitments as well as meeting the growing demand for energy in the country.

The Central government has exhibited a strong commitment to meet its climate control obligations, but the path is not easy.

The power sector faces many problems — take the issue of ₹1.56 lakh crore of outstanding dues of Discoms. This, coupled with the weak financial position of State Discoms, is another area of concern for the Central government. Another major headwind is the impact of Covid on the supply chain, which has affected the timely implementation of several schemes like PM-KUSUM (rural solar power project) and rooftop solar. The outstanding dues of Discoms to electricity generation companies (Gencos) have created a bottleneck for the government’s ambitious goal of 24x7 power supply. To address the issue, the Power Ministry came out with the Revamped Distribution Segment Scheme (RDSS).

The scheme has an in-built pre-qualifications mechanism relating to States and State Electricity Regulatory Commissions (SERCs). The pre-qualifications include conditions like States have to pay their subsidy on time, revise power tariffs every year, pay government dues, and do not create regulatory assets. States who meet these pre-qualifications will continue to get grants.

Coal shortages

Another pressing issue is the availability of sufficient stocks of coal for running thermal power plants.

Coal stocks at power plants depleted to 7.2 million tonnes (mt) (stock for 4 days) on October 8, 2021. The government swung into action taking several measures to boost stocks. Subsequently, the stocks started increasing and reached 19.52 mt (stocks for 11 days) as on December 12 for plants having coal linkage. Coal India (CIL) dispatched around 64 mt more coal during April-November 2021 compared to last year. CIL dispatched 421.11 mt coal during this period, against 357.13 mt during the same period last fiscal.

To deal with the alarming situation, an inter-ministerial sub-group with officials from the ministries of Power, Coal, Railways as well as the Central Electricity Authority (CEA), Coal India and Singareni Collieries now meets regularly to review the distribution scenario. An Inter-Ministerial Committee composed of Secretaries of Coal, Power and Environment as well as the Chairman of Railway Board has been set up to review the situation and ensure adequate supply of coal to power plants.

Revised coal stocking norms based on 85 per cent Plant Load Factor (PLF or capacity utilisation) have been issued by the CEA, mandating the coal stock of 17 days at pit head stations and 26 days at non-pit head stations to be maintained by power plants during February to June every year.

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