Context:
India’s renewable energy transition has made rapid generation-side progress, but experts argue that structural reforms in power distribution and electricity markets are essential to fully harness green electrons efficiently.
Key Highlights:
- Renewable Energy Status
- India’s renewable energy capacity has crossed 180 GW, making renewables the cheapest source of new power generation.
- Role and Stress of Discoms
- Discoms are central to integrating renewables but suffer from financial stress due to:
- High technical and commercial losses (around 16%)
- Cost under-recovery despite reforms like UDAY and RDSS
- Smart Metering and Tariff Reforms
- About 49 million smart meters have been installed.
- Mandated time-of-day tariffs aim to align consumption with renewable availability.
- Market Design Challenges
- Discom incentives are linked to volumetric electricity sales, discouraging system-wide efficiency.
- High-paying consumers are shifting to rooftop solar, energy efficiency, and open access, weakening discom finances.
- Net metering credits rooftop solar at near-retail tariffs, despite embedded cross-subsidies.
- Wholesale Market Reforms
- A nationwide market-based economic dispatch system could reduce annual procurement costs by about $1.6 billion.
- Integrating captive power plants and adopting centralised dispatch would prioritise the cheapest power, including renewables.
- Technology and Demand Response
- Automated solutions like smart thermostats and EV charging are needed for effective demand response, as manual adjustments are impractical.
Relevant Prelims Points:
- Discoms: Utilities responsible for electricity distribution to end-users.
- Net Metering: Mechanism crediting surplus rooftop solar power exported to the grid.
- Demand Response: Adjusting electricity use based on price or grid signals.
Relevant Mains Points:
- Generation-side expansion without distribution reforms risks renewable curtailment and financial instability.
- Market-based dispatch improves efficiency, competition, and cost-effectiveness.
- Power sector reforms are critical for achieving climate goals and energy security.
- Way Forward:
- Redesign discom incentive structures towards efficiency and reliability.
- Accelerate smart grid deployment and automated demand response.
- Implement nationwide market-based dispatch with strong regulatory oversight.
UPSC Relevance
- GS 2: Governance, power sector reforms
- GS 3: Economy, infrastructure, energy transition