According to a latest report released by FICCI, India loses $68 billion, or about Rs 4.15 crore, of its Gross Domestic Product (GDP) due to electricity shortage. There is strong correlation between power consumption and the GDP of the country. Stakeholders, experts and state-level policymakers are seeking reforms to facilitate growth of energy sector up to its potential.
The past three months witnessed what can be considered as a fresh boost for the sector. The government has tried to resolve two of the most pressing issues: delay in project clearances-18 projects worth about Rs 90,000 crore have been cleared; and firming up fuel supply arrangements, the power ministry, in collaboration with the coal ministry, directed Coal India to sign fuel supply agreements (FSAs) with power producers to the extent possible. This move affected the fuel supply for about 140 projects, including operational ones running below capacity due to inadequate fuel supply. Augmenting existing power plants' productivity makes immense sense the immediacy of energy supply can be enhanced while fuel supply can be arranged for under-construction and under-planning projects through additional sources.
Apart from coal, the government is also working on gas supply issues as many projects are stranded due to low gas supply or costly gas availability. The power ministry is planning to seek cabinet approval to cap gas price for the sector at $5 per million metric British thermal unit (mmBtu). At present, power producers source domestic gas at $4.2 per mmBtu, but uncertainty on price has arisen after the government approved the price recommendations by a panel headed by C Rangarajan, Chairman of the Prime Minister's Economic Advisory Council. The ministry is making efforts to source the fuel at an affordable price for gas-based power plants, which have a capacity of 7,800 MW but are facing a large fuel shortage. Until India's gas extraction is indisputably in place, this form of generation will continue to be iffy and unreliable.
Meanwhile, the Central Electricity Regulatory Commission has already recommended to the states to raise the tariff in order to adjust the rising fuel cost due to costly imported coal and gas. The promise of renewable energy's converging cost-lines should be encouraging to new plants that hope to gain from future long-term power purchase agreements (PPAs) and other on-grid applications. Does this all indicate a turnaround for the sector? That's what our Cover Story discusses. There is much to be still discussed in our future issues: Do the states have the financial muscle to absorb the additionally generated power? Can our states genuinely afford to be power-surplus?
In addition, I'd like to announce the launch of our new section,'Renew'. The importance of renewable energy cannot be underestimated, and Power Today understands the criticality of new technology, of hybrid plants, of converging costs, and of the bright horizon ahead for businesses that have eyed the sector but haven't found it entirely lucrative as a stand-alone business. The day is not far off when the lure of renewable energy will draw in hundreds of new players, both domestic and increasingly, international. How will the government play this out? How will the industry respond? What new technologies will have a genuine bearing on the pricing of RE? These are the questions 'Renew' will answer for you. Happy reading!
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