India's Comprehensive Power Strategy to Meet Growing Demand
The Indian government is actively working to ensure that power supply consistently stays ahead of demand through a multi-faceted approach. This involves expanding generation capacity, shifting priorities toward cleaner energy sources, and implementing critical reforms in the distribution sector.
Expanding Generation with a Focus on Renewables and Nuclear
Historically, the emphasis was on adding thermal capacity, but the current priority has shifted decisively toward renewable energy, particularly solar power. However, since solar energy is not available around the clock, significant attention is being directed toward developing storage solutions to ensure reliability.
Nuclear energy is also set to play a crucial role in India's energy mix. The current nuclear capacity stands at approximately 8 gigawatts (GW), with an additional 12GW in the pipeline. The long-term target is ambitious: achieving 100GW of nuclear capacity by 2047. To facilitate this, states have been encouraged to develop at least one nuclear project each, fostering nationwide participation in this clean energy initiative.
The Role of Thermal Power and Grid Stability
Continuous power supply, essential for grid stability, currently relies on thermal, nuclear, or gas-based generation. Gas, however, is expensive and thus not a priority. Thermal power remains vital for providing this baseload supply. All thermal projects that can be developed up to 2032 have already been planned, with around 20,000MW of capacity under active development.
After 2032, new thermal plants may become unnecessary as India progresses toward its commitment of achieving net-zero emissions by 2070. Existing thermal plants will continue operating until the end of their life cycles, but their overall share in the energy mix is expected to gradually decline as renewable energy expands.
Addressing Distribution Sector Challenges
The distribution sector, while reporting a profit of about Rs 2,700 crore for discoms, still grapples with substantial debt and accumulated losses estimated around Rs 6.7 lakh crore. Historically, losses increased due to tariffs not aligning with costs, often because governments announced free or subsidised power, creating a gap where the cost of supply exceeded the tariff charged.
Reforms have shown progress: Aggregate Technical and Commercial (AT&C) losses have decreased from 23-24% a decade ago to around 16% today. This improvement stems from removing illegal connections and enhancing billing systems. Building on past initiatives like the UDAY scheme, which transferred discom debt to state governments, further reforms are being considered. These include partial privatisation and exploring models where multiple suppliers operate in the same area to foster competition, similar to the telecom sector.
State-Level Initiatives and Farmer Concerns
Several states are taking steps toward privatisation. Gujarat has begun moving in this direction, Haryana is exploring options, and Uttar Pradesh is considering increased private participation. In Haryana, a proposed model involves creating a separate company to handle agricultural electricity connections, separating agricultural feeders to improve power accounting clarity.
Farmer organisations have expressed concerns about privatisation, but the Centre assures that reliable electricity for irrigation will remain a priority. Subsidies will continue regardless of whether supply comes from government or private entities. The focus is on ensuring that operations remain unaffected, with discussions ongoing about introducing competition among suppliers to benefit consumers.
Smart Meters and Hydro Projects
The widespread installation of smart meters is a key component of modernising the power sector. Initially met with resistance, especially in rural areas, acceptance is growing as people recognize the benefits. Prepaid smart meters not only provide convenience but also improve liquidity in the power sector by bringing in advance payments, potentially injecting nearly Rs 1 lakh crore into the system and reducing reliance on loans.
Regarding hydro projects, following the suspension of the Indus Waters Treaty, efforts are underway to revive and expand hydroelectric capacity in Kashmir. Existing plants are operational, with desilting work ongoing to restore reservoir capacity. Work has resumed on three to four previously stalled projects, and additional projects are in the planning stages, including site identification. Proposals to divert water toward Punjab and further to Rajasthan, Haryana, Uttar Pradesh, and Delhi through canals or tunnels are also being evaluated for feasibility and financial viability.
