Power Progress

Reforms and renewables dominate the sector

Renewable energy capacity additions have dominated the country’s power sector in the past year given the growing attention to decarbonising the economy and fulfilling the commitments made at the COP26 summit, that is, to meet 50 per cent of energy requirements from renewable sources by 2030 and achieve the net zero target by 2070, among other things. Apart from this, the Ministry of Power has launched the result-oriented Revamped Distribution Sector Scheme (RDSS) with the aim of turning around the distribution segment through network strengthening, loss reduction and smart metering. Indian Infrastructure invited industry experts to share their views on the power sector’s progress, challenges and outlook…

What has been the progress in the power sector over the past year?

Manish Agarwal, Director and CEO, India Transmission Business, Sterlite Power

Manish Agarwal

Power is among the most critical components of infrastructure, crucial for the economic growth and welfare of nations. Despite the projection of a slight growth deceleration, the gap between India’s per capita power consumption (1,208 kWh) and the global average implies that dema­nd growth is poised to accelerate in the medium to long term. In fact, 2022-23 is expected to be the second consecutive year in which power demand is likely to grow at over 6 per cent. The current fiscal will also be the second year of power demand exceeding pre-pandemic levels and the long-period average of 5 per cent.

In order to meet the increasing demand for electricity in the country, significant generation capacity addition is required along with robu­st transmission and distribution infrastructure. In 2021-22, India added 13.5 GW of rene­w­able energy capacity. Further, it added 16,750 ckt. km of transmission lines and 57,575 MVA of transformation capacity.

The previous financial year also saw in­c­re­a­sed government focus on renewables to acc­elerate the energy transition. An emerging challenge in this regard is that huge generation ca­pa­cities are being added much faster than eva­cuation systems can be built. Transmission systems need to come up within a stringent time frame of 18-24 months to meet the pace of renewable energy generation. The challenge is to build transmission lines that consume the least right of way (RoW) and are commissioned in matching time frames of renewable energy projects, with efficient capital availability to en­sure the least cost of supply. Here, I would like to applaud the Ministry of Power’s (MoP) direction to consider the construction period of in­ter­sta­te transmission system (ISTS) projects ba­s­ed on distance, voltage and difficulty levels in im­ple­mentation including the type of terrain and different clearances to be obtained.

Alternatively, solutions are available to build lines with higher capacities, at higher voltages and with less RoW requirement for enabling faster execution of projects. New-age technologies such as high performance conductors (HPC) with carbon composite core can transfer more than double the pow­er from the same line to meet the future requirement. Fur­ther, technologies such as gas-insulated su­bstations are an attractive solution in space-constrained are­as with high land costs. A thru­st on high voltage direct current syste­ms will also enable utilities to move more po­wer further, efficiently integra­te renewables, interconnect grids, and improve network performance.

Lastly, the MoP’s decision on planning tra­nsmission facilities for offshore wind energy pro­jects in India is another welcome move.

“Considering India’s strong focus on renewables, a robust interconnected grid is extremely important to deal with the intermittency of renewable energy generation. The transmission sector will drive theenergy transition in the country.”Manish Agarwal

Ujjwal Kanti Bhattacharya

Ujjwal Kanti Bhattacharya, Director (Projects),
NTPC Limited

The thermal power sector in India is going th­rough a critical transition phase. The world and the country want to move away from thermal, but they have little choice. In fact, India has no choice but to go for a graded transition. It is es­sential for the energy security and the economy of the country that we continue with thermal ge­neration for some decades till we achieve net zero in 2070. The intensity of thermal po­­w­er will have to go down progressively.

For a country like India, where per capita en­ergy consumption is very low, ensuring energy security is an equally important aspect. Me­e­ting the en­ergy needs of underserved populations, and im­p­roving safe and sustainable en­ergy access for the poorest and most vulnerable groups, are the primary considerations in India. This is the classic “energy trilemma”.

According to a Central Electricity Authority report, in 2021-22, the share of coal, lignite and gas power plants in the total installed ca­pacity stood at about 59 per cent. In terms of electricity generated, about 70 per cent was ge­nerated from these plants. The total investme­nts in coal power plants were around Rs 10 trillion. In my opinion, the thermal power sector is still a major contributor and will remain, if not a major, at least a significant contributor to energy security and the future growth of the country.

Although India has announced its intenti­ons to cut down carbon emissions through its Nationally Determined Contributions and the Glasgow Declaration, and achieve the target of net zero emissions by 2070, the exact methods of achieving these targets are still under development. The thermal sector is and will be the ma­jor source of power in the country in the co­ming few decades. The thermal power sector as well as the thermal power plant (TPP) manufacturing sector need to be supported in order to ma­intain the fleet of thermal projects. The enti­re ecosystem – regulators, bankers and in­ves­to­rs, insurers, manufacturers and consu­mers – has to keep this in mind.

“The thermal sector is and will be the major source of power in the country in the coming few decades.” Ujjwal Kanti Bhattacharya

Srivatsan Iyer

Srivatsan Iyer, Global Chief Executive Officer, Hero Future Energies

India, the world’s third largest producer and con­sumer of electricity with a generation capa­city of approximately 400 GW as of March 2022, is on the brink of a major transition.

The installed renewable energy capacity increased by almost 15 GW (14 GW of new so­lar projects and 1.1 GW of new wind projects), from 94.4 GW in March 2021 to around 110 GW in March 2022. Of the 14 GW of solar ca­pacity added in 2021-22, the utility-scale seg­ment accounted for a share of 73 per cent, followed by the rooftop (16 per cent) and off-grid (11 per cent) segments.

Given the 55 GW under-construction pipe­line along with multiple new tenders in the pipe­line, the sector should see sig­ni­ficant growth over the medium to long te­­rm. How­ever, recent disruptions due to volatility in global commodity pricing, supply chain delays, imposition of basic customs duty (BCD) and the Approved List of Models and Manufacturers (ALMM), etc., may prove to be a dampener for new capacity addition in the short term.

“The constitution of the Green Hydrogen Mission and the release of the policy outline are very  encouraging developments.” Srivatsan Iyer

Sabyasachi Majumdar, Senior Vice President, ICRA limited

Sabyasachi Majumdar

Electricity demand in India remains buoyant in the current fiscal due to the recovery of economic activity and the severe heatwave in the northern and central parts of the country in the first quarter. The demand increased by 18.5 per cent in the first quarter of 2022-23 over the corresponding period in the previous year. The demand is likely to witness a year-on-year growth of 6.5-7 per cent at the end of this fin­a­n­cial year. This follows a healthy demand gro­w­th of 8.2 per cent in 2021-22. The recovery in electricity demand is expected to improve the all-India average thermal plant load factor (PLF) level to 61-61.5 per cent in 2022-23 from 58.9 per cent in 2021-22.

Coal-based independent power producers (IPPs) benefited from the sharp increa­se in short-term tariffs in the first quarter of 2022-23 and despite the adverse impact of high coal prices. A sustained improvement in electricity de­mand growth and in turn the thermal PLF level remains a critical factor to impro­ve the outlook for thermal generation.

The outlook for the renewable energy sector is favourable, led by the continued policy su­pport from the Government of India, strong project pipeline and superior tariff competitiveness offered by wind and solar power projects – both in the utility and the open access segme­nts. The installed capacity in the renewable en­er­gy segment has doubled over the past 5.5 years, led by strong policy support and tariff

co­m­­petitiveness. Investment prospects are ex­pected to remain strong over the next deca­de, with a target to reach 450 GW renewable energy capacity by 2029-30 from the current level of 114 GW.

The key challenges constraining the growth are on the execution front, mainly associated with land and transmission infrastructure, distribution utility finances and tariff viability concerns amid elevated module prices and hardening interest rates. The prices of mono PERC mo­du­les have increased by over 40 per cent to 27-28 cents per watt in the past 18 months due to a sharp inc­re­a­se in the price of polysilicon and supply chain issues in China amid Covid-19. Wh­i­le the supply chain challenges are showing sig­ns of im­provement, prices remain elevated amid co­ntinued higher prices for polysilicon. This, al­ong with the imposition of customs duty from April 2022, has kept module prices relatively high in India. Notwith­standing these iss­ues, the solar bid tariff rates continue to be highly competitive at less than Rs 2.4 per unit, as seen from the recent bids. While this is positive from the discoms’ perspective, the ability of the de­velopers to make these projects viable remains to be seen.

“A major area of concern affecting discom finances is the significant delay in the process of tariff determination in many states.” Sabyasachi Majumdar

Professor S.L. Rao

Professor S.L. Rao, Former Chairperson, CERC, and Member, Advisory Board, Competition Commission of India

It is very difficult to identify any single major ele­ment of progress in the past one year. There has been considerable improvement in the av­ai­lability of power, but there are major weaknesses in the distribution and pricing of power, and these need to be dealt with.

“There has been considerable improvement in the availability of power, but there are major weaknesses in the distribution and pricing of power, and these need to be dealt with.” Professor S.L. Rao

 

What has been the impact of the key initiatives taken by the government?

Manish Agarwal

A key achievement for the sector has been the successful implementation of the Saubhagya scheme, under which the government has el­ec­trified every village and every household in the country.

India is also leading the dialogue and ac­ti­ons on climate change. The government is stro­ng on its commitment towards renewable en­ergy deployment with power generation capacity expected to hit 820 GW by 2030, over 500 GW of it from non-fossil fuel sources. Oth­er no­table initiatives include Gati Shakti, which outlines the vision for infrastructure development, including the power sector in general and tra­ns­mission in particular.

The MoP has also shown a consistent com­mitment towards public-private partnership in different spheres of the power sector, tariff-bas­ed competitive bidding (TBCB) being one of them.

Discoms are the only piece that is still a cause for concern. The RDSS Sche­me is a good attempt to revive the ailing state power distribution utilities.

Srivatsan Iyer

India, with one of the largest renewable energy expansion plans globally, has set ambitious targets to reduce its total projected carbon emissions by 1 billion tonnes by 2030, reduce the carbon intensity of its economy by more than 45 per cent by the end of the decade, and ac­hieve net zero carbon emissions by 2070.

In accordance with the prime minister’s announcement at COP26, India has increased its renewable energy targets to achieve 500 GW of installed electricity capacity from non-fossil fuel sources by 2030.

Government support and a favourable policy framework have been critical in developing the renewable energy sector up to this point, where it is now competitive. The government will conti­nue to play an important role, providing supp­ort in the development and deployment of new-age technology solutions such as long-term energy storage and green hydrogen to address the more complicated problems of tomorrow, while providing a more even playing field and a free market for all players across the renewable energy value chain.

The need for development of a domestic manufacturing ecosystem to support this massive growth in renewables is being addressed through initiatives such as the manufacturing-linked tender and the production-linked incentive (PLI) scheme. How­ever, the imposition of BCD on cells and modules will put a strain on developers and IPPs and this issue needs to be suitably addressed in the short term to avoid a slowdown in renewable energy deployment.

The Government of India is trying to boost renewable energy demand through revised re­ne­wable purchase obligation targets, su­pport for open access, waiver of interstate transmission system charges, the CPSU scheme, the Ki­san Urja Suraksha evamUtthaanMahabhi­yan, a rooftop solar scheme and many such me­a­sures. Further, states such as Madhya Pra­desh and Karnataka are finally coming out with agg­ressive renewable energy policies. These mea­su­res have been a source of encourage­me­nt for developers across the country.

The government has also recognised the impact of delayed payment by discoms to IPPs and has come up with various measures such as long-term financial assistance to some discoms, revision of rules regarding payment se­cu­rity mechanisms, etc. These actions are providing some long-awaited respite to IPPs.

We are also seeing a significant expansion of the transmission infrastructure and crea­ti­on/announcement of new substation capacity under the Green Energy Corridor scheme for the evacuation of renewable energy power.

In addition, there has been an increased fo­cus on new technology adoption and energy sto­rage through new-age round-the-clock and dedicated battery energy storage system (BESS) tenders by both central and state agencies. In fact, Hero Future Energies has recently won one of India’s first standalone 20 MWh BESS tender by Kerala State Electricity Board Limited.

Also worth noting is the focus on the development of a green hydrogen ecosystem in the country. The constitution of the Green Hy­dro­gen Mission and the release of the policy outline are very encouraging developments.

Sabyasachi Majumdar

The demand outlook for domestic solar original equipment manufacturers (OEMs) remains favourable, with the strong policy support th­rough imposition of customs duty on impor­ted cells and modules, the notification of the PLI scheme and inclusion of only domestic manufacturers in the ALMM. The policy push is ex­pected to im­prove the cost competitiveness of domestic OEMs and lead to large capacity an­nouncements by various OEMs and entry of new players. The ability of the OEMs to achieve backward integration and build economies of scale would be important to remain competitive ag­ainst overseas suppliers on a sustained basis. The share of domestic OEMs in solar po­wer installations in the country is likely to witness a healthy growth led by these policy initiatives over the next three to five years.

Professor S.L. Rao

Over the years, the government has done a few things, which might make the situation of energy suppliers a little better in terms of payment, etc. However, coal has not benefitted a great deal from this. I am not too happy with the existing situation. It has something to do with the fu­ndamentals of the system. First, the most im­portant part of the system is the fact that India is a federation. Electricity, being a concurrent subject, states have their own policies. My problem has been that there is no compulsion on state-owned electricity distribution companies to produce a surplus in their operations and this has been a problem for the past so many years. This is due to the fact that the state governments, being close to the voting population, are inclined to offer subsidies. These subsidies are not reimbursed in time and sometimes not at all, leaving electricity distribution companies in a bad shape in terms of their ability to pay. There must be a compulsion for the state electricity regulatory commissions to oversee that the distribution companies are run either with a surplus, or are reimbursed without delay with respect to any action that they undertake due to government directives, which results in them losing money. The situation has not changed. Unfortunately, the appellate tribunal created in 2003 also does not seem to have the authority to change this situation.

What are the key challenges that remain un­addressed?

Manish Agarwal

Considering India’s strong focus on renewab­les, a robust interconnected grid with the abi­lity to carry power from any point to any point, and often in both directions, is extremely important to deal with the intermittency of renewable en­ergy generation. Hence, the transmission sector will drive the energy transition in the country. It must facilitate the twin objectives of 24×7 energy access and affordability. To attain its true potential in the next decade, the power sec­tor will have to move towards flexible transmission network planning, freedom of design to promote innovation, greenfield projects to­gether with capacity augmentation of existing transmission infrastructure, and energy storage solutions.

An emerging challenge from renewable energy integration into the grid is that huge ge­neration capacities are being added much fas­ter than evacuation systems can be built. Fur­­th­er, renewable energy-rich zones, with high so­lar insolation and wind speeds and abundant and economical land parcels, are all located away from the load centres. The challenge is to build transmission lines that have the least RoW and are commissioned in matching time frames of renewable energy projects.

Moreover, to expedite transmission projects, we need a conducive policy and regulatory framework that is open to new technology adoption. Efforts are also needed to hasten forest/wildlife approvals and RoW clearances. To fast-track RoW approvals, clear land compensation guidelines have been issued by the MoP and efforts need to be made to ensure implementation by the state government and the local administration so that the projects are not delayed.

Finally, retrofitting the existing transmission infrastructure and augmenting capacities is an environmentally friendly solution that can be adopted in a timely and cost-effective manner as these do not require additional/RoW. The MoP is working on a revis­ed power transmission plan, which is a welcome move.

Ujjwal Kanti Bhattacharya

Coal is the only source of baseload power generation in India due to the dearth of domestic gas, the limited potential of hydro, and India not being a member of the Nuclear Suppliers Gr­o­up. Other technologies such as hydrogen and fuel cells are still under development for use on a commercial/megawatt scale. Car­bon ca­pture and carbon sequestration/utilisation technologies are also at the research and development stage.

The efficient utilisation of TPPs is another challenge in the transition ph­a­se. The annual plant load factor (PLF) of TPPs has fallen in recent years with the growth of renewable energy, which is a concern for thermal power generators. There is a la­ck of clarity regarding the fu­tu­re of thermal po­wer in the market. So, inves­tors are very cauti­ous about investing in the thermal power sector.

The economy of India in general and of some states such as Jharkhand, Madhya Pra­desh, Chhattisgarh and Odisha, in particular, is critically dependent on coal mining. Coal mining and coal-based power plants generate a large quantum of direct and indirect invest­me­nts and employment. Foreign banks and re­insurers must not shy away from coal, at least till the country achieves net zero.

India has announced a massive capacity addition programme for renewable energy, and is aiming for a reduction in the emission intensity of its GDP. But the import dependency of the country’s solar power sector on modules and silicon feedstock is the biggest hurdle in ac­hieving India’s ambitious target of capacity addition in the renewable power sector.

The decarbonisation of the energy sector is a complex and multifaceted issue as the existing energy production and consumption systems are among the largest human enterprises in the world, and large technological, social and economic assemblages are built around the­­se systems.

Some of these challenges and some possible solutions are:

  • Technical challenges: These can be add­re­ssed with the integration of thermal power with renewables, which have flexible generation schedules and large seasonal and diurnal variations; flexibilisation of TPPs; im­proving the energy efficiency and reliability of TPPs during part-load operations; investments in technology required for energy storage, etc.
  • Financial challenges: Huge investments have been made in coal mines, TPPs and sy­s­tems to satisfy the new emi­ssion norms. Fur­­ther, there is a risk of creating stran­d­ed/ stressed assets due to un­cer­tainty in the financial and political environment.
  • Social challenges: These can be addressed by supporting communities and individuals who might be affected directly and indirectly by decarbonisation; research and development of new, indigenous technologies to suit the requirements of the clean energy transition with a strong potential to address the so­cial challenges of providing jobs; investments in multidimensional factors such as education and human capital.

Srivatsan Iyer

The sector has seen significant growth in the past couple of years, especially in the renewable energy space with almost 110 GW of renewable energy generation assets in operation, 55 GW under deployment and another 33 GW under bidding, but there is a long way to go to meet the 500 GW renewable energy goal. The sector needs to address some long-standing structural issues to ensure renewable en­ergy growth is in line with these targets.

  • Module and other RM availability and price uncertainty: The implementation of 40 per cent BCD on modules and 25 per cent on ce­lls is expected to hamper renewable energy growth in the short term. This, along with ALMM and gl­o­bal supply chain disruptions, has increased module prices to historic highs. We expect these prices and higher internati­o­nal volatility to lead to an increase in discovered tariffs over the next few months.
  • Fragile financial health of discoms: The po­or financial health of discoms and associated payment delays to renewable energy developers are causing a multitude of issues such as requirement of working capital financing, re­duc­tion in return expectations and low in­ves­tor interest in such projects. Until solutions are found through discom restructuring, regulatory reforms, operational reforms and technology adoption, state power projects will continue to underperform expectations.
  • Transmission and distribution infrastructure expansion: With the current pace of demand gro­wth and renewable energy deployment, grid expansion nee­ds to be expedited. To en­sure readine­ss for accelerated growth in the fu­ture, dedicated green energy corridors, re­newable energy management centres, compe­titive bidding for transmission infrastructure and private sector involvement should be promoted.
  • High cross-subsidy charges and wheeling charges: High cross-subsidy and other wh­­ee­ling charges imposed on commercial and in­dustrial (C&I) consumers are hampering the growth of open access power across sta­tes. Long-term policy visibility, reduction of additional transmission charges and cro­ss-subsi­dy on C&I consumers will help promote in­vestment in open access capacities, which will be critical for the growth and decarbonisation of the C&I sector.
  • Policy variations at the state level: Variations in state-wise policies and regulations has led to confusion among prospective investors and lack of long-term policy visibility in some states has somewhat depressed the investment sentiment in power generation projects in states. There should be long-term policy stability in states and the central government should evolve mechanisms to streamline the state policies and regulations.

Sabyasachi Majumdar

The thermal segment continues to face challenges owing to the lack of meaningful pro­g­ress in signing of new long-term/medium-term power purchase agreements (PPAs), delays in payme­n­ts from discoms, inadequacy of do­mestic coal av­ailability and a sharp increase in in­ter­national coal prices in the recent past. More­over, the tigh­ter environmental compliance requirement re­ma­ins a key challenge for this segment.

Further, state-owned distribution utilities continue to be in fragile financial health, due to the high level of aggregate technical and commercial (AT&C) losses, inadequate tariffs in re­lation to the cost of power supply, delays in subsidy support from the state governments and delays in receiving payments from sta­te government bodies. Their overall debt burden, despite the implementation of the UDAY, is estimated to have increased to over Rs 6 trillion in 2021-22. Considering the highly subsidised nature of pow­er tariffs for agriculture and certain sections of residential consu­mers, the overall subsidy de­p­endence is estimated to remain high at about Rs 1.5 trillion this year at an all-India level. As a re­sult, the discoms in key states continue to report losses, leading to delays in payments to po­wer generating companies and impacting the quality of supply to consumers.

A major area of concern affecting discom finances is the significant delay in the process of tariff determination in many states. The tariff determination process for discoms for 2022-23 remains sluggish, with tariff petitions for 2022-23 being filed by 24 out of 29 states and tariff orders being issued only for 18 states. While the median tariff hike is higher in 2022-23 compared to the past two years, this is

likely to remain inadequate considering the ex­pected increase in the power purchase cost for the discoms in 2022-23 due to the rising de­pendency on costlier imported coal.

Professor S.L. Rao

One of the important challenges in my view is the selection of regulators. I think we do not have a proper system where the people who are selected as regulators are truly independent of the government and are able function in a clear, autonomous and independent manner. This is important and must be done. I do not know how this can be ensured by the state governments and whether the central government has any authority to decide that regulators must be selected by independent bodies.

I would also say that we need a review mechanism to assess the performance of the regulatory bodies. The matter has been left to each local government and this is quite unsatisfactory because there is a much closer relationship between the selected regulators and the concerned state governments.

The next thing we need is coordination bet­ween regulatory bodies in different sectors. I hoped to achieve this in my time many years ago as the central regulator by creating a body called the Forum of Indian Regulators (FOIR). While FOIR has introduced some important changes within the electricity sector, I think it has not successfully been able to coordinate bet­ween regulatory bodies on several issues. For example, I would like to see a much greater degree of coordination between the Securities and Exchange Board of India and electricity re­gu­latory bodies to ensure that electricity com­pa­nies, whether private or public, function in an effective manner as far as their financial he­a­lth is concerned.

What is the sector outlook for the next one to two years?

Manish Agarwal

The outlook for India’s energy sector is positive, and we are very upbeat about contributing towards its energy security. India wants to generate 50 per cent of its electricity using renewables by 2030. This is massive and as a nation if we want to achieve this, funding for renewables as well as transmission infrastructure needs to go up in tandem.

As per the ISTS network expansion plan, projects worth Rs 1,250 billion have been identified and planned for execution till 2026-27. This amounts to new addition of around 32,000 ckt. km of line length and 217,000 MVA of ISTS transmission capacity by 2026-27.

For green energy corridor-2, an intra-state pipeline of around Rs 120.31 billion is identified to be implemented across the states of Gu­jarat, Himachal Pradesh, Karnataka, Kerala, Raj­as­than, Tamil Nadu and Uttar Pradesh. The intra-state segment is also showing promising signs. Key states like Gujarat, Odisha, Megha­laya, Maharashtra, Madhya Pradesh and Uttar Pradesh are in the process of adopting the TBCB mode for bidding transmission projects. The intra-state transmission system pipeline is robust too, spelling an opportunity worth Rs 100 billion till 2023-24.

On the technical side, solutions to uprate and upgrade the existing infrastructure to en­hance corridor capacities will go hand in hand. We expect the market to grow at a CAGR of about 35 per cent in this financial year. We aim to reap the benefits of being early pioneers in this business segment and others trying to replicate our model. In products, there is a huge op­portunity in the form of upcoming TBCB bids with a strong demand forecast for HPC. We are focusing on technical innovation and engineering. When it comes to manufacturing, we are hi­ghly focused on high performance products with a view to lowering the carbon footprint.

Ujjwal Kanti Bhattacharya

The long-term outlook for the power sector is bright. However, in the near and medium term, it has to pass through a number of transitions, some of which may not be comfortable. The sector has to brace for these. We have to think of innovative solutions and ways to handle the transitions. Some of the innovations may be disruptive to existing systems, and we have to plan for that too.

Sabyasachi Majumdar

In its budget 2021-22, the central government had announced the launch of a “reforms-based and results-linked” scheme for the distribution sector with the objective of improving the financial health and operational efficiency of discoms by reducing AT&C losses. Subsequ­en­tly, the RDSS was notified in July with an overall outlay of Rs 3.03 trillion. This is inclusive of a budgetary grant/support of Rs 976.31 billion, spread over a five-year period. Under the scheme, AT&C lo­sses are sought to be brought down to 12-15 per cent by 2025-26, through smart metering and upgradation of the distribution infrastructure, including the segregation of agricultural feeders. As of April 2022, the Government of India has approved proposals of 13 states under this scheme with a financial outlay of around Rs 1.62 trillion. The timely implementation of projects under the scheme including the smart me­te­ring programme remains key to improving the discom efficiencies.

On the whole, focus on improving operational efficiency, timely issuance of tariff orders with adequate tariff revisions and timely subsidy payouts are necessary to ensure the financial sustainability of discoms. A strong political will and support from the state governments is needed to achieve this objective.

Professor S.L. Rao

The sector is fundamental to the whole economy and there is no way it could be allowed to collapse or to do too badly. So, circumstances will compel the state governments to function in such a manner that the electricity sector performs well financially. What is required is a much more clear-headed way in which the regulatory bodies regulate power distribution and other companies under them. I do not think we have any satisfactory and clearly agreed me­thod by which governments can regulate these bodies. In summary, I would argue that all distribution companies should be left free to function effectively so that they are financially sou­nd at all times. For this, the regulator must be truly independent of the concerned government and take informed decisions for the health of the sector.

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