- The articles discusses about the proposed amendments in the Electricity Act.
Electricity Act, 2003
- The Electricity Act, 2003 is an Act of the Parliament of India enacted to transform the power sector in India.
- The act covers major issues involving generation, distribution, transmission and trading in power.
- Competition and choice
- The proposed amendment aims to bring in competition and choice in supply for the final consumer.
- A single public utility will run the wires through which electricity flows, multiple supply licenses (both public and private) will be allowed to compete for licenses.
- The competition will lead to improved supply and lower bills.
- Issue of cross-subsidy
- The amendment aims to get price right by capping cross-subsidies at 20% immediately and eliminating them within three years.
- The cross-subsidy surcharge on open access customers- the fee that holds back customers from leaving the grid- would be eliminated within two years.
Need for these changes
- India has among the highest electricity tariffs for industry, which bears the burden of low-performance and losses among other consumers, impacting their global competitiveness.
- The amendment talks about subsidizing the poor through direct benefit transfers.
- The proposed legislation makes subsidy to the poor the collective responsibility of the States and the Centre.
- Three-level committees
Three level committees to facilitate efficient, economical and integrated transmission and supply of electricity.
- National Power Committee
- Regional Power Committee
- State Power Committee
Objectives of the committee–
- The committees will aid voluntary inter-connections and coordination of facilities for inter-State, regional and inter-regional generation and transmission of electricity.
- These committees are expected to set the base for the Centre’s larger goal of having a national-level discom that can balance the integration of renewable energy in the national grid.
- Power purchase agreements (PPAs)
- A power purchase agreement (PPA) is a legal contract between an electricity generator (provider) and a power purchaser (buyer, typically a utility or large power buyer/trader).
- The proposed amendment said, “Violation of PPA will lead to penalties which may be as determined by the Appropriate Commission which may be fines which may extend to Rupees One crore per day, and, in case of licensees may also extend to suspension and cancellation of licence.”
- Penalties for violation of PPAs comes as a major relief for power generators which lately have been facing brunt of states cancelling PPA citing high cost or lack of funds.
- Separation of content & carriage:
- This would entail more than one electricity supplier in an area and consumer will have options to choose their preferred electricity supplier.
- Getting smarter:
- The Electricity Act has mentioned Smart Meter and Prepaid Meters and regulations related to the same, making it mandatory to install smart meter. This would help proper accounting of power consumption and wastage.
- 24X7 Power supply is an obligation:
- The draft amendments propose that 24X7 power supply is an obligation and the state electricity regulatory commission can penalise the power distribution company (discoms), if it fails to do so.
- The Commission can suspend or revoke the license of the discoms as well, which has been mandated for the first time.
- Nobel Prize 2018 in Economic Sciences (The Sveriges Riksbank Prize) was divided equally between William D. Nordhaus and Paul M. Romer.
- William D. Nordhaus and Paul M. Romer have designed methods for about how we create long-term sustained and sustainable economic growth.
- William D. Nordhaus have been contributed “for integrating climate change into long-run macroeconomic analysis. He became the first person to create an integrated assessment model, e. a quantitative model that describes the global interplay between the economy and the climate. Nordhaus’ model is used to examine the consequences of climate policy interventions, for example carbon taxes.
- Paul M. Romer has integrated technological innovations into long-run macroeconomic analysis. Romer demonstrated how knowledge can function as a driver of long-term economic growth by his “endogenous growth theory” which explains how ideas are different to other goods and require specific conditions to thrive in a market. Romer’s theory has generated vast amounts of new research into the regulations and policies that encourage new ideas and long-term prosperity.
- The Department of Defence Production under Ministry of Defence has given in principal approval for 31 projects under Make-II scheme.
- It is an industry-funded scheme to make clearance easier and scaling up production of defence projects.
- Under Make-II scheme, the Ministry of Defence has a sub-category of suo motu submission of proposals.
SPARK (Support for Prototype and Research Kick-start) scheme
- SPARK framework by the Defence Innovation Organization – Innovations for Defence Excellence (iDEX) in partnership with Atal Innovation Mission, is aimed at supporting Startups/MSMEs/Innovators to create prototypes and/or commercialize products/solutions in National Defence and Security.
- The vision of this framework is two-fold:
- help create functional prototypes of products/technologies relevant for national security (prototyping), and spur fast-moving innovation in the India defence sector;
- help new tech products/technologies and a market and early customer (commercialization) in the form of the Indian Defence Establishment.
- The committee headed by Baba Kalyani has proposed reincarnation of SEZs in India as ‘Employment and Economic Enclaves (3Es).
- The committee has proposed overhaul of the SEZ policy by shifting fiscal incentives from exports to investments made and employment generated.
- A special economic zone (SEZ) is an area in which business and trade laws are different from the rest of the country. For example- taxation benefits to units in SEZs.
- SEZs are located within a country’s national borders.
- SEZ aims include: increased trade, increased investment, job creation and effective administration,etc.
- The committee emphasized on development of last-mile and first-mile connectivity infrastructure.
- Supply of power directly to units in SEZ from Independent Power Producer (IPPs) at competitive prices.
- Integrated MSMEs with the 3E’s and giving additional incentives to zones focusing on priority industries.
- Tax benefits to be retained for the services sector.
- The committee suggested that flexibility should be considered to enable 3E units to seamlessly support businesses outside the zone.
Objective of the committee
- To make the SEZ policy WTO-compatible
- Encouraging manufacturing and the services sector
- Maximizing utilization of vacant land in SEZs
- Intergovernmental Panel on Climate Change (IPCC), recently released a report in Seoul presenting four pathways to explore the possibilities of keeping the temperature rise within 1.5 degrees Celsius.
- In each pathway, the global average temperature is projected to overshoot the 1.5°C target by some amount before returning to that level by the end of this century.
- The four pathways involve Carbon Dioxide Removal (CDR) in varying amounts and account separately for contributions of fossil fuel and industry, Bioenergy with Carbon Capture and Storage (BECCS), and removals in the Agriculture, Forestry and Other Land Use (AFOLU).
Note: Bioenergy: It is renewable energy created from natural, biological sources. Many natural sources, such as plants, animals, and their byproducts, can be valuable resources. Modern technology even makes landfills or waste zones potential bioenergy resources.
Carbon Capture and Storage (CCS):It is a technology that can capture up to 90% of the carbon dioxide (CO2) emissions. It consists of three parts:
(i)capturing the carbon dioxide,
(ii) transporting the carbon dioxide,
(ii)securely storing the carbon dioxide emissions, underground in depleted oil and gas fields or deep saline aquifer formations.
- Following are the different pathways to reduce the global temperature rise to pre-industrial levels:
- Pathway 1:
(i) While living standards rise, especially in the global South a scenario is needed in which social, business, and technological innovations result in lower energy demand up to 2050.
(ii) To achieve this, afforestation is the only CDR option considered; neither fossil fuels with Carbon capture and storage (CCS) nor BECCS are used.
- Pathway 2:
(i) A scenario with a broad focus on sustainability including energy intensity, human development, economic convergence and international cooperation is required.
(ii) Moreover, shifts towards sustainable and healthy consumption patterns, low-carbon technology innovation, and well-managed land systems with limited societal acceptability for BECCS.
- Pathway 3:
(i) A middle-of-the-road scenario is needed in which societal as well as technological development follows historical patterns.
(ii) Emissions reductions are mainly achieved by changing the way in which energy and products are produced, and to a lesser degree by reductions in demand.
- Pathway 4:
(i) A resource and energy-intensive scenario is prevalent in which economic growth and globalization is leading to widespread adoption of greenhouse-gas intensive lifestyles, including high demand for transportation fuels and livestock products.
(ii) Emissions reductions mainly achieved through technological means, making strong use of CDR through the deployment of BECCS is required.
- In 2015 Paris agreement the world agreed to keep temperatures below 2 degrees Celsius and “pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels. However with the U.S. withdrawing from the accord, the chances of such an ambitious target were significantly weakened.
- IPCC reported that to ensure the livability of planet, global CO2 emissions have to be reduced by 45% from 2010 levels by 2030 and renewables must provide up to 85% of global electricity by 2050 to meet targets.
- All this would need an annual average investment of around $2.4 trillion in energy systems to move from coal to renewables between 2016 and 2035.