The power sector has a direct relationship with economic activity-indeed, economists cross-check GDP data (which is difficult to calculate) by comparing it with changes in power consumption (which is relatively easier to calculate). While generation is crucial, robust transmission and distribution are also critical, as are consumption metering and bill collection.
While India’s power consumption is rising steadily as the macro economy grows, the fuel mix is also changing, as there is a drive towards sustainability. While India will be dependent on thermal power for the foreseeable future, renewables are rapidly increasing their contribution to generation, and will continue to do so.
Transmission and distribution capacity also needs to be built, and grids and meters have to become smarter as the power mix changes. Large-scale integration of solar and wind power requires significant investment in both inter- and intra-state connectivity to manage fluctuating availability and prevent cascading grid failures.
Power exchanges are also a key element in the value chain since they enable merchant generators and consumers to quickly adjust for changes in supply and demand. Billing and collection remain weak points within the power system, which faces a high level of losses.
The entire sector, especially the push to induct more renewables and technology, is largely driven by policy changes. Initiatives such as the National Solar Mission and the National Green Hydrogen Mission have been successful in guiding the shift towards renewables, but more needs to be done on this front to achieve the net zero goals.
Across generation, transmission and distribution, policy modifications to accelerate clearances for RoW and land acquisition would be helpful. Open access remains only a theoretical possibility, although it has been mooted as desirable since 2003.
Various schemes to strengthen metering, bill collection and clearing of dues by discoms have had some positive impact, but the aggregated losses of discoms continue to increase, albeit at a slower pace. Policymakers need to find ways to close the average revenue realisation gap since financial losses are dragging down the entire sector and inhibiting investments.
There are enormous opportunities across the entire power sector for investors, entrepreneurs and technologists. The thrust towards generation via renewables creates room for start-ups, and makes it imperative to facilitate changes in T&D technology. Managing the “last mile” and improving billing and collections are vital, however, if the momentum is not to be lost.