India has a 200-GW power system which is growing at a healthy pace, while dealing with technological, environmental and regulatory discontinuities. The need for continuous investment in conventional and renewable generation, as well as transmission infrastructure and domestic and imported fuel is being recognised — and, in fact, felt acutely — with the recent shortages.
The power sector will see a revival of growth momentum in 2018 as the reforms of the past few years deliver results. The last-mile power distribution reforms are expected to accelerate further in 2018, given the government’s focus on mega projects in infrastructure and manufacturing, household electrification, and efforts to enforce the obligation to supply. This should lead to an uptick in demand and energy usage by several notches. Renewables are expected to remain the fastest-growing energy source in 2018, on the back of larger, more efficient projects and lower risks, resulting in lower renewable energy tariffs.
For attaining the goals of sustainable development an idea that may be considered is to utilise the funds generated from coal cess (National Clean Energy Fund or NCEF) for part-financing or providing soft loans for clean-energy initiatives.
Another model could be to provide incremental tax benefits to renewable energy producers every time they achieve certain scale milestones, for example, 1 GW capacity as IPP. Generators who achieve the milestone can be incentivised appropriately. The dream of the power sector becoming an integral part of the GST framework, hopefully, can be realised in 2018. Bringing electricity under GST will allow public and private power generators to get credit of the taxes paid on coal, spares and services and make them more competitive. Talking about the end-consumer, it’s time to introduce power-supply portability. Ensuring performance standards in discom operations can accelerate loss reduction, tariff reform and competitive power procurement.
(The author is CEO and Country Head, Sembcorp.)