A roundup of 2022: The Power sector - India

India's power sector is one of the most diversified in the world. Sources of power generation range from both conventional sources (such as coal, lignite, natural gas, oil, hydro and nuclear power) as well as non-conventional sources (such as wind, solar, agricultural, and domestic waste). Let’s take a recap of the important events that shaped the Indian power sector this year.

Indo-Nepal Partnerships

Early this March, Nepalese prime minister Sher Bahadur Deuba made his first foreign trip after coming to power last year. Apart from resuming rail links between India and Nepal, the heads also finalised agreements on the supply of petroleum products and released a joint vision statement on power sector cooperation.

On July 15, Indian Union Cabinet decided to provide a loan to the Nepal Oil Corporation (NOC), the state-owned petroleum importer and supplier, to clear its dues accumulated against the Indian Oil Corporation (IOC) due to an adjustment in the price of petroleum products.

As of November 2022, Nepal has already exported electricity worth Rs 10.4 billion to India, since Nepal Electricity Authority resumed selling power in the Indian market in 2022.

The UP-Coal crisis

In early April, Uttar Pradesh made it to the headlines as it faced one of its biggest electricity crises as the backup coal stocks for thermal power plants started to deplete.

The coal shortage usually worsens during the monsoon months when the supplies fall short annually due to rain and floods that disrupt mining and transportation. But this time, the coal shortage that started in April was largely due to a lesser supply from coal companies that are facing a shortage of wagons for ferrying coal to plants. The situation may only get worse with the rains and floods in the coming weeks. Alternative arrangements to ferry coal by road were arranged to diffuse the crisis.

The situation remained grim till the end of the Monsoons when many cities in the UP faced power cuts, sometimes that extended for hours (https://energy.economictimes.indiatimes.com/news/coal/coal-crisis-stares-at-up-power-sector/91103375)

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Announcement to revamp the Distribution Sector Scheme (RDSS)

In July 2021, in the grand finale marking the culmination of ‘Ujjwal Bharat Ujjwal Bhavishya – Power @2047’, the Ministry of Power (MoP) announced the Revamped Distribution Sector Scheme (RDSS) with an overall outlay of INR 3.03 trillion, to improve the operational efficiency and financial sustainability of discoms by providing result-linked financial assistance. The scheme is phased to be implemented across five years, from 2021-22 effective through 2025-26, and will be executed based on a customised action plan for each state. (https://recindia.nic.in/revamped-distribution-sector-scheme)

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The scheme also incorporates all current projects sanctioned under programmes such as the IPDS, DDUGJY, and the Prime Minister’s Development Package (PMDP)-2015 (https://powerline.net.in/2022/08/01/paving-the-way-2)

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?Electricity (Amendment) Bill, 2022

In August, to address the lack of competition in the segment, the power ministry introduced the Electricity (Amendment) Bill, 2022, in the Lok Sabha. The bill proposes crucial amendments to the Electricity Act, 2003 to enable competition in retail power supply through non-discriminatory open access to multiple distribution licensees in an area. In other words, this will give consumers the freedom to choose their electricity supplier rather than having to depend on state-owned distribution utilities alone.

India’s power consumption doubles

India's power consumption logged a double-digit growth of 13.6 per cent to 112.81 billion units (BU) in November 2022 compared to the year-ago period, according to government data. As a comparison, the electricity consumption for the same month, in the year 2019 stood at 93.94 BU. Experts say this robust growth in power consumption in November this year indicates sustained recovery.

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The future is bright!

India is the third-largest producer and consumer of electricity in the world and as per a report by Infomerics Valuation and Rating Pvt Ltd, a SEBI-registered and RBI-accredited financial services credit rating company, India will undergo the largest increase in energy demand worldwide over the next 20 years.

As per the India Energy Outlook 2021 (https://www.iea.org/reports/india-energy-outlook-2021), in recent years, Indian electricity connections have not just expanded their network; but have promoted the adoption of highly efficient LED lighting by most households; and prompted a massive expansion in renewable sources of energy, led by solar power.

It’s really exciting to be a part of the Indian power sector as it rises in spite of all the local hindrances and global challenges.