Power is one of the most critical components of infrastructure and is crucial for both economic growth and welfare of the nation. India's power sector is one of the most diversified in the world, with an investment potential of `15 trillion ($223.67 billion) in the next four to five years.
Problem of Plenty
India has become a power surplus nation, albeit with certain caveats. In its wake, it has changed the whole paradigm of generation sources, with solar and wind hogging the spotlight and coal being relegated a bit.
Growing trend is switching from long term PPAs to short term contracts
We have already seen an increase in appetite for short term power from the utilities following the financial leeway brought about by the debt restructuring. Over the long term, sustained improvement in distribution operations as envisaged under UDAY, could bring significant improvement.
Things will improve only when PPA bidding opportunities come up
While the government has announced measures on coal side and RBI is trying to give more elbow room to banks and institutions which have lend money to these projects, real improvement will come up only when PPA bidding opportunities come up.
Three years and three cheers!
Three years is not a long time to judge a government's performance, but it is long enough to set a trend in power sector reforms in the country. Narendra Modi's government at the Centre, which completed three-year tenure in the last week of May 2017, has some achievements to boast of in the sector that touches everybody's life.
Cabinet clears coal linkage policy
In a long awaited relief for the thermal power sector, the Cabinet has approved ‘Shakti’ (acronym Scheme to Harness and Allocate Koyla (Coal) Transparently in India), a policy which aims to auction long-term coal linkages to power companies. The move is expected to revive 30 GW of power plants awaiting fuel supply, including those of Reliance Power, Adani Power, Lanco Infratech, GMR Energy, DB Power, CESC and KSK Energy.
Indian solar tariffs fall 25percent in three months
Last week, SECI’s 750 MW utility scale auction in Bhadla solar park saw tariffs fall to a new astounding low of Rs 2.44 (US¢ 3.79)/kWh. This comes after much brouhaha over tariffs falling to Rs 3.25/kWh (levelised) and Rs 3.15/kWh in Rewa, Madhya Pradesh and Kadapa, Andhra Pradesh respectively in the last three months.
The unintended consequences of low solar tariffs | BTI
India’s race to the bottom for solar power prices has resulted in some unintended consequences. These range from some electricity distribution companies (discoms) wavering on signing power purchase agreements for projects awarded at higher tariffs to postponement of some tenders, according to consulting firm Bridge to India.
Guj regulator’s decision forces wind firms, discoms to make peace
The Gujarat power regulator’s decision to make February auction’s all-time low winning bid as the base price for wind power purchases has forced developers and power distribution companies in Gujarat make an unhappy truce, but it sets stage for further trouble in the fledgling sector.