Power Plants to be Provided with Adequate Coal; Next Wave of Reforms in Power Sector to be Unleashed Soon
Coal-based electricity generation from June to August 2014 grew by a record 21% compared to corresponding period last year.
CIL has given an in-principle decision to purchase 250 additional rakes [for Rs. 5,000 crores] to evacuate more coal. Moreover, the government is expediting build-out of 3 critical railway lines in Chhattisgarh, Jharkhand and Odisha, which could potentially yield 60 million tons per annum by 2017-18 and up to 200 million tons by 2021-22.
Automatic transfer of linkages is being allowed from old & inefficient plants [>25 year old plants: ~32,500 MW] to ultra-modern super-critical plants in order to maximize power generation from the same amount of coal. Coal linkage rationalization is also underway [Gujarat and Chhattisgarh swap completed] which aims to link power plants to the nearest mines. This initiative alone could save hundreds of crores, if not more.
Ensuring speedy environmental clearances [cluster based approach, with time-bound monitoring] and steps to protect the environment.
Amicably resolved anti-dumping duty dispute of solar components, so as to give greater impetus to “Made in India”; solar energy equipment.
Renewed thrust to wind power capacity addition by reinstating accelerated depreciation benefit to wind power developers
Deen Dayal Upadhyaya Gram Jyoti Yojana [expected investment of Rs. 43,000 crore] for feeder separation of agriculture and domestic usage, and strengthening of transmission and distribution infrastructure in rural areas. Integrated Power Development Scheme [expected investment of Rs. 32,600 crore] for strengthening of sub-transmission and distribution in urban areas, including 100% metering and underground cabling.
This Government inherited a host of legacy problems in the power sector. Over 30 crore Indians do not have access to electricity, which has a debilitating impact on healthcare, education and income-enhancing opportunities, particularly for women and children. Power cuts have become a part of daily life. Despite such enormous demand for electricity, coal and gas-based power plants, where lakhs of crores have been invested, are either lying idle or performing sub-optimally. State electricity boards have an accumulated debt of over Rs. 3,04,000 crores and their losses are Rs. 2,52,000 crores putting them at the brink of financial collapse. A series of ill-conceived moves handicapped the renewable energy sector.
Energy conservation was not an area of focus. Over the last 100 days, this Government has held detailed consultations and deliberations with 18 states along with major stakeholders such as related Ministries [Environment & Forests, Commerce, Railways, Finance, Petroleum & Natural Gas, Steel, Mines etc.], financial institutions, industry associations, transmission & distribution companies, power producers, renewable energy players etc.
Having understood the complexities and underlying factors behind what this government inherited, a series of initiatives were undertaken and some results are beginning to show.
The Government endeavours to ensure adequate coal for power plants by targeting production of 1 billion tons by 2019. Already, coal-based electricity generation from June to August 2014 grew by a record 21% compared to corresponding period last year. Even coal production has grown by 9% in August 2014 as compared to August 2013. The principal supplier of coal, Coal India Limited [CIL], has addressed the persistent demand of the consumers for guaranteed quality coal, by allowing them to conduct 3rd party sampling, and by installing washeries and crushers to clean and grind coal. Resultant reduction in ash and suspended particle matter would also significantly lessen environmental damage. Many steps have also been initiated to evacuate greater quantities of coal such as CIL's in-principle decision to purchase 250 additional rakes [for Rs. 5,000 crores] and expediting build-out of 3 critical railway lines in Chhattisgarh, Jharkhand and Odisha, which could potentially yield 60 million tons per annum by 2017-18 and up to 200 million tons by 2021-22.
Moreover, automatic transfer of linkages is being allowed from old & inefficient plants [>25 year old plants: ~32,500 MW] to ultra-modern super-critical plants in order to maximize power generation from the same amount of coal. Coal linkage rationalization is also underway [Gujarat and Chhattisgarh swap completed] which aims to link power plants to the nearest mines. This initiative alone could save hundreds of crores, if not more. Steps to clamp down on coal pilferage are also being taken, in a systematic manner by leveraging technology [e.g., RFID tagging of coal movement and establishment of a National Coal Dispatch Monitoring Centre].
Several steps are being taken to resolve stranded gas based capacity [24,148 MW] issue and plans have been made to use gas primarily to meet peak load demand or to meet exigencies, since electricity generation can be ramped up at a short notice.
With an aim to maximize electricity production from hydroelectric power [potential: ~1,48,000 MW], particularly in the North Eastern states so that not only the country benefits from the increased power capacity but also the power-starved North Eastern states themselves get more power and also significantly enhance their incomes by trading surplus power. Time bound action plans to expedite environmental clearances have been developed.
Centre doubled Clean Energy Cess [from Rs. 50 to Rs. 100 / ton of coal] contributing to National Clean Energy Fund to garner greater resources for financing renewable energy.
Budget outlay for renewables has been increased by 65.8% [including direct hike in solar financing by Rs. 1,000 crores] primarily for solar water pumps and setting up of ultramodern solar power projects. The anti-dumping duty issue has been amicably resolved as well with an impetus on "Make in India"; solar manufacturing, and a priority for domestic content.
The government has also restored accelerated depreciation benefit to wind-power developers to expeditiously ramp up wind generation capacity. Ad-hoc termination of this benefit in 2012 had resulted in nearly 50% fall in capacity installations in 2013.
Deen Dayal Upadhyay Gram Jyoti Yojana with expected investment of about Rs.
43,000 crores for feeder segregation for agriculture and domestic usage in rural India, and Integrated Power Development Scheme with expected investment of about Rs. 32,600 crores for strengthening of sub-transmission & distribution infrastructure, including metering in urban areas and underground cabling. Together they would be a major step forward for our vision of 24x7 consistent power. Long-pending transmission projects worth Rs. 12,272 crores have also been cleared. Green Energy Corridor for evacuation of renewable power is being expedited as well.
Other regulatory moves such as amendments in Electricity Act 2003 and Tariff Policy have been finalized and this would unleash the next wave of reforms such as competition in retail and Renewable Purchase Obligations [RPO] enforcement.
The Government has approved National Mission on Enhanced Energy Efficiency [NMEEE] in August 2014 with an outlay of Rs. 775 crore. It will enhance investments for better technology, creation of a venture capital with partial risk guarantee fund, appliance rating system and notification of a new building code for energy conservation.
Once again, the government reiterates its commitment for affordable and consistent 24x7 power for all homes, within 5 years.
