Electricity

Vol VIII, No 1 JANUARY 6, 1973

As part of the COVID-19 economic stimulus package, the Government of India increased the borrowing limit of the states from 3% to 5% of the gross state domestic product. The power sector reform at the state level is one of the criteria to avail this extra borrowing. The efficiency parameters of the power sector are analysed here, and it is observed that there are statewise differentials in the financial and operational parameters. The average aggregate technical and commercial losses that should have been 15% by 2018–19, presently, on average, stand at 26.15%. The average cost of supply–average revenue realised has also widened. The operational parameters indicate widening inefficiencies across states in the power infrastructure.

Demand for electricity in India is growing due to the increase in GDP and quality of life along with structural changes in the energy sector leading to the increase in the percentage share of electricity in the total final consumption of energy. Decarbonisation of the energy sector is a necessity, and it should be achieved without negatively affecting economic growth of the country. It can be best managed by having a diverse portfolio of technologies as diversity provides supply security, resilience, and hedging against price fluctuations. Therefore, all low-carbon technologies—hydro, nuclear, solar, and wind—should be exploited and provided with a level playing field.

The Renewable Purchase Obligation mechanism and the trade of Renewable Energy Certificates were introduced to promote investment in renewable energy. However, the RPO requirement has not been met in many cases in India, which has resulted in low trading in RECs. While there are a few instances of state electricity regulatory commissions imposing penalties, a uniform enforcement of this mechanism by imposing specific penalties on non-complying entities can be recommended.

This paper examines the performance of four southern states in various economic and social sectors during the past decade, comparing and contrasting them with each other and the average all-India figures in these sectors. Andhra Pradesh and Karnataka have done the most to initiate reforms in recent years. Kerala is moving in this direction too, after initial delays, as is Tamil Nadu. As the four states face several individual and common challenges in the coming years, they need to deepen reforms and tailor strategies in keeping with their particular circumstances, in their quest for growth.