POWER February 2020 - 8

India's Energy Market Overhaul-
Infrastructure, Renewables, and
Keeping Coal in the Mix
India wants to reform its power generation
sector, including upgrades to energy
infrastructure, and plans to introduce new
technology to make its electricity supply
more reliable and resilient. It's part of an
announced set of changes to help utilities
and the country's power markets, and
could cost as much as 2.5 trillion rupees
($35 billion) over five years, according to
reports published in January.
Officials recently told Indian media the
initiatives would focus on infrastructure
and technology upgrades of financially
struggling utilities to make them more
efficient and reduce losses. The government
wants to enhance public-private
partnerships, revise tariff structures, and
do more with smart metering. It's part
of an energy overhaul in the country announced
last year by Prime Minister Narendra
Modi's Bharatiya Janata Party, with
a price tag of more than $1.4 trillion. Officials
said the government could provide
grants to power suppliers who meet certain
conditions set by national lawmakers.
The new plan comes after a similar
effort, launched in 2015 and designed to
make the country's retailers profitable by
March 2019, did not reach its goals. The
prior plan called for reducing revenue
lost from theft and poor billing practices
to an average of 15%; a power ministry
report in October 2019 said revenue losses
fell, but only dropped to about 18%
through the first quarter of 2019, while
net income losses for power suppliers
rose about 85% year-over-year.
" India's electrical system is in urgent
need of an overhaul. India experiences
frequent losses and outages, and modernizing
the power grid should be a key
priority of the Modi administration, " Liam
Hunt, a writer and market analyst at SophisticatedInvestor.com,
told POWER.
" Sweeping energy reforms are needed
to improve operational efficiency and
connect the estimated 240 million Indians
living without electricity. "
While India's power generators have
acknowledged the need to improve the
electricity supply network, and move toward
a more carbon-neutral economy,
Modi recently said he did not favor a carbon
tax, according to Reuters; the government
currently taxes coal production and
imports at 400 rupees ($5.61) per metric
8
ton. Reuters reported that India's government
wants to waive the carbon tax
because " the savings would improve the
financial health of utilities and distribution
companies and help the power producers
to install pollution-curbing equipment. "
There are additional concerns that the
tax would bring higher electricity prices.
It's against that backdrop that the nation's
generators must decide where to earmark
future investment.
Hunt told POWER that more standardization
in power markets across India is
needed. " This process should begin with
regulatory harmonization at the federal
level, " Hunt said. " Currently, there are no
shared standards for open market energy
trading between India's 29 states. The
retail prices of energy vary from state to
state, which puts additional stress on
utilities. Although Modi's $35 billion investment
is a welcome and long-overdue
initiative, the administration should
strongly consider opening the federal
market to retail competition and leveraging
tariff reforms to align electricity costs
with market prices. "
The plan
to upgrade power
infrastructure
could include the installation
of about 250 million prepaid smart meters,
designed to help boost revenue
collection. India also is looking to add
better electricity monitoring and control
networks, or SCADA-supervisory control
and data acquisition systems-to
separate grids between rural and urban
areas. Part of the plan also includes replacing
existing overhead power lines
with better-insulated wires in an effort
to prevent electricity theft. Government
reports have said power distributors
lose about 20% of potential revenue for
" technical and commercial " reasons,
which includes power leakage from inefficient
transmission infrastructure, and
poor billing and collection methods. The
additional investment in smart meters is
expected to be supported by power retailers,
and funded using the efficiency
gains from the infrastructure upgrades.
The country's power ministry is working
with electricity suppliers on other
improvement measures, which could be
partly funded by the federal government
based on achieving efficiency targets.
Meanwhile, Modi's move to eliminate
the carbon tax on coal, while providing
cost savings for power generators,
would also cut a revenue stream for govwww.powermag.com
1.
The India One solar power plant came
online in 2017. The 1-MW plant, a demonstration
project in Abu Road, Rajasthan, includes
a storage component enabling a night-time
power supply. It utilizes a parabolic dish design,
with 770 dishes across 25 acres, and
powers the Brahma Kumaris campus at
Mount Abu. Source: Brahma Kumaris / Creative
Commons
ernment-backed system upgrades, even
as the government wants companies to
install pollution controls at existing coalfired
plants. Officials from India's Central
Pollution Control Board had threatened
to close plants on January 1 if the facilities
had not installed equipment to cut
emissions of sulfur oxides; the government
said just one of 11 power generators
in the New Delhi region had installed
the equipment as of that date, though no
action was taken to shutter plants.
Some utilities said they still were
seeking direction from the central government
about how equipment should
be installed. The government already
had extended a December 2017 deadline
for plants to install emissions-reduction
technology. Reuters in December reported
that more than half of India's
coal-fired power plants, and 94% of the
coal-fired units that had been ordered to
install emissions-reduction equipment,
would likely miss the deadline. State-run
power generator HPGCL was said to be
" pleading " with government officials to
extend the emissions deadline, and other
generators were pushing for another
extension. The Vedanta Group, a private
company with interests in several industries,
including power, said it was " confident "
the government " would take a
considerate stand " for the situation.
Vedanta Group has announced it plans
to invest heavily in solar energy, with a
goal of generating at least 1 GW of solar
power (Figure 1) in the next few years.
The International Renewable Energy
Agency last year issued a report that said
India has the lowest costs for installed
utility-scale solar in the world. Vedanta
POWER | February 2020
http://www.phisticatedInvestor.com http://www.powermag.com
POWER February 2020

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