Addition of record power generation, focus on renewable energy development

GN Bureau | February 26, 2016


#Economic Survey   #Budget Session   #Arun Jaitely  

In view of the sweeping changes made in the power sector in the last two years, 2014-15 witnessed the highest ever increase in generation capacity of 26.5 GW. Capacity enhancements have brought down the peak electricity deficit to its lowest level ever of 2.4%. Central and state governments have come together to address problems related to the health of distribution companies and the debt overhang problem via the Ujwal DISCOM Assurance Yojana (UDAY). The economic survey suggests that the tariffs for the poor can be reduced while covering costs and without unduly burdening those better off.

The economic survey states that steps have been taken towards “Making One India” in the power sector. The open access (OA) policy introduced under the Electricity Act 2003, which allows consumers with electricity load above one MW to procure electricity directly from electricity markets, was the first step towards discovering a single market price for power around the country.

High tariffs and erratic supply have led to a slow but steady decline in the growth of industrial electricity purchases from utilities and a gradual transition towards captive generation.

The compound annual growth rate (CAGR) of captive power generation between 2006-07 and 2014-15 is 9.3% compared to 4.6% for electricity procured from utilities. This could be exacerbated in the coming years as decline in oil prices and costs of renewable energy alternatives may prompt a further shift to captive power.

The survey states that renewable energy targets have been revised from 32 GW to 175 GW to give a policy push to the renewable sector and sustainable development. Grid parity for solar generation is on its way to becoming a reality with auctions under the national solar mission resulting in all time low tariff of Rs 4.34 per KWh.
 

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