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The Union power ministry has asked states and industry associations to submit their suggestions for framing the national electricity policy (NEP), 2021 within the next three weeks. The government has constituted a committee, led by former chairperson of the Central Electricity Regulatory Commission Girish Pradhan, to come up with NEP, 2021. The committee will submit its suggested draft NEP, 2021 within two months.
The last NEP was formulated in 2005, and since then, per capita power consumption has nearly doubled to the current level of 1,208 units. Share of renewable electricity has increased to 10% of overall consumption from 0.75% in the same period.
The new policy will focus on improving the health of electricity distribution companies (discoms), implementing cost reflective tariff structures, and setting up adequate infrastructure through hydro and gas-based power plants to accommodate the rising share of intermittent renewable energy in the system. The new policy will also aim to improve the quality of electricity supply and increase the share of indigenous equipment used across the power value chain.
To allow more renewable energy based power supply, the power ministry has suggested higher use of storage technologies through hydro power plants, battery storage and other emerging technologies such as hydrogen storage. It has also suggested retrofitting existing coal-based power plants to make them more flexible so that they can easily start up or shut down according to generation from solar and wind plants.
Acknowledging that coal-based power is still the cheapest source of electricity, the ministry’s resolution to the upcoming policy stated that upcoming coal plants should only use the most efficient technologies.
The policy will also likely bat for a differential tariff regime for end consumers, where power prices will be higher during hours of peak demand. Differential pricing will also support the construction of more expensive pumped hydro storage plants, which can be crucial for the smooth integration of renewable energy in the system. The resolution also talks about speeding up the installation process of conventional hydro plants.
To improve discoms, the government has pushed more private participation in the sector and increase competition by removing the monopolies of state-run firms. The resolution also recommends mandatory installation of smart pre-paid meters to control pilferage. It also advocates 100% metering of distribution transformers within three years from the current level of 37%. The power ministry has reiterated Centre’s stance which advocates states to provide subsidy to legitimate consumers through direct benefit transfer.
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