Power sector year-ender: Distribution reforms, coal supply, green energy expansion to fire growth in 2017
* Government to look into electrification of each household after remaining 4 per cent villages are electrified
* All are states likely to come under the ambit of distribution reform, UDAY and focus on loss reduction
* Government to extend its energy efficiency plans to fans and tubelights
* India likely to save 140 billion units of electricity through energy efficiency measures
* Over 20,000 MW renewable capacity likely to be added in 2017-18. No new thermal capacity to be added
New Delhi: India’s power sector is set to enter the next phase of growth in 2017 with the government promising to continue focus on distribution reforms, coal supply improvement and further expansion of the green energy generation capacity. Experts, however, flag subdued domestic demand and absence of long-term power purchase agreements as areas of concern.
The power ministry says it has prioritised its plans on village electrification, energy efficiency and expanding the coverage of the Ujjwal Discom Assurance Yojna (UDAY) scheme during the next year. So far, 17 states have signed agreements under UDAY including of Jharkhand, Chhattisgarh, Rajasthan, Uttar Pradesh, Gujarat, Bihar, Punjab, Jammu & Kashmir, Haryana, Uttarakhand, Goa, Karnataka, Andhra Pradesh, Manipur, Madhya Pradesh, Maharashtra, Himachal Pradesh and Puducherry.
“Slow progress in signing of long-term PPAs by discoms has led to sizeable thermal capacity (estimated at around 25,000 Mw) without long term pacts. This, in turn, remains exposed to both price and volume risks in the short-term power market,” Girish Kumar Kadam, Vice President ICRA Ratings said. “Significant rise in coal price level internationally in last six months is a credit negative for the merchant thermal capacity given the depressed short term tariff levels,” he added.
Increased coal production is expected to provide relief to domestic customers in the new year as the government is working on a plan to ramp up Coal India’s production to 1 billion tonne by 2020. “Adequate supply of the domestic coal to power plants has been ensured. The growth of domestic coal supply to power plants has been around 6.2 per cent during 2015-16,” the minsitry said in a statement.
The power ministry also plans to further expand the ongoing rural electrification programme in 2017. The government had completed electrification works in 116,680 (96 per cent) un-electrified villages and intensive electrification in 399,829 (67 per cent) villages at the end of November 2016.
The ministry also plans to expand its underground power cabling programme across multiple states in the new year. Power minister Piyush Goyal had earlier this year laid the foundation stone for underground cabling work under the Integrated Power Development Scheme (IPDS) in Varanasi. Next year, the government’s energy efficiency drive will also progress from LED bulbs to efficient fans and tubelights.
Experts said they were upbeat about the power sector’s outlook going forward. “Our outlook on the Indian Power sector is stable reflecting the policy initiatives taken by the government, sustained improvement in domestic coal availability and likely improvement in the financial position of state owned electricity distribution companies in the next 2-3 years,” Kadam said.
The power ministry said it plans to provide cleaner and more efficient electricity in the new year by replacing power plants of NTPC, India’s largest generator, which are more than 25 years old. India is likely to commission a total of 13,440 Megawatt. Of this, nine power projects with capacity of 3,608 Mw have been commissioned by October end.