Opinion

Old king coal still chief power player



India has averted large power outages during peak summer demand by increasing its reliance on coal-fed electricity-generation capacity. Share of renewables isn’t improving, partly on account of the intermittence of supply from solar and wind energy. Both thermal and renewables face tepid investor interest because of uncertainty over payments by distribution companies. The Centre has had some success in nudging states to bring down indebtedness of their distribution monopolies, but not on a scale to inspire investing confidence by private capital. The new generating capacity coming up is, thus, skewed in favour of public-funded coal-fired plants.

Distribution holds the key to capacity build-up across the electricity value chain. This is the only point in the chain where revenue enters the system, and it remains because political parties use it to price power to their advantage. The immediate bottleneck, of discoms running up huge bills with generating companies that, in turn, was affecting payments to coal suppliers, has been corrected substantially in the past two years partly by some smart persuasion. The way forward would be to break monopolies by allowing multiple distributors to share transmission infrastructure. Here, too, challenges are more political than economic. More work also needs to be done to curb power theft through smart metering.

Tepid investment in power storage from RE sources amplifies the problem of intermittence fosters overdependence on coal. PLIs for domestic battery manufacturing have not delivered substantially, but GoI is pitching hard to foreign investors. Renewables offer India a pathway to reduce its dependence on energy imports, apart from achieving self-imposed emission reduction targets. At this point, however, India will feed its economic growth through energy from all sources, and significant energy transition will be deferred. This comes at a cost in terms of price of energy and climate mitigation. But India’s growth through exports could pass some of this cost to the rest of the world.



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