India’s power and renewable energy sector is witnessing substantial growth, with an impressive investment of Rs 17.05 lakh crore in the pipeline, according to Union Minister R K Singh. This surge comes after a notable investment of Rs 16.93 lakh crore since 2014. The minister highlighted that a significant portion, Rs 11.2 lakh crore, has been invested in sectors like generation, distribution, and transmission, while Rs 5.73 lakh crore has been directed towards the renewable energy sector.
Singh informed reporters that the ongoing construction includes 80 GW of thermal power generation capacity and 99 GW of renewable energy, both expected to be operational by 2030. The minister emphasized that India’s power generation capacity is set to soar to over 800 GW from the current 428 GW. To achieve this, India plans to auction 50 GW of renewable energy projects annually.
In terms of the newly introduced Electricity (Amendment) Rules 2024, Singh shared insights on measures to enhance ease of doing business. Notably, consumers with a specified quantum of load and Energy Storage Systems (ESS) can now establish, operate, and maintain dedicated transmission lines without the need for a license. This is anticipated to create a new category of Bulk Consumers, benefiting from more affordable electricity and improved grid reliability.
The facility for establishing dedicated transmission lines was previously available to generating companies and captive generating stations. The new rules also aim to facilitate energy transition by allowing industries such as Green Hydrogen manufacturers to connect to the grid more efficiently, fostering energy security and faster establishment of energy storage capacity.
Additionally, the rules address open access charges, aiming to ensure competitive rates for consumers, including industries. The methodologies for determining various open access charges, such as wheeling charges and state transmission charges, have been rationalized. To further encourage open access, the rules stipulate a linear reduction and eventual elimination of additional surcharges within four years for consumers availing General Network Access or Open Access.
Financial health of distribution companies (discoms) is addressed in the rules by ensuring cost-reflective tariffs and eliminating revenue gaps. The rules mandate that tariffs must be cost-reflective, and any gap between the approved Annual Revenue Requirement and estimated annual revenue from approved tariffs should not exceed three percent, except under extraordinary circumstances like natural calamities.
To discourage the creation of revenue gaps, the rules call for time-bound liquidation of any such gaps. For any existing gaps at the time of rule promulgation, the liquidation is mandated to occur in a maximum of seven equal yearly installments. Singh highlighted that the government’s interventions have already reduced distribution companies’ losses from 27 percent in 2014 to 15.41 percent in 2022-23.
The removal of the license requirement for dedicated transmission lines is anticipated to boost ease of doing business for industries, fostering faster industrial growth and job creation, according to the minister. These rule changes align with India’s broader goals of increasing renewable energy capacity, improving grid reliability, and ensuring the financial sustainability of the power sector.
In conclusion, India’s power and renewable energy sectors are poised for significant expansion with substantial investments and regulatory changes aimed at fostering sustainable growth, ease of doing business, and improved financial health for key players in the energy landscape.