Rural Power sector – Way ahead: Explained, pointwise

Source: The Hindu  

Syllabus: GS 3 – Infrastructure: Energy

Relevance: India’s power sector and the problems with Discoms need radical solutions to achieve Energy Security.


Recently, Rajasthan Electricity Regulatory Commission(RERC) ordered that energy access must go beyond powering rural homes. In other words, the order mentioned the need to electrify essential and productive human activities, such as public schools and primary health centres. This presents an opportunity to decentralize solar power generation and makes solar infrastructure more climate-resilient.

About the Electrification problem
  • Over the past decade, India has made great strides in expanding energy access in rural areas. World Bank data shows a near doubling of electrified rural households, from 55% in 2010 to 96% in 2020.
  • While this is a significant measure, it discounts large areas of essential and productive human activities, such as public schools and primary health centres. Further, despite greater electrification, the power supply is often unreliable in rural areas.
  • A recent ruling by Rajasthan’s power regulator points to this gap and suggests solutions that other States could emulate.
Rajasthan Electricity Regulatory Commission’s order
  • It has ordered the State’s three power distribution companies (discoms) to solarise unelectrified public schools. This includes the Jaipur, Ajmer and Jodhpur Vidyut Vitran Nigam Limited.
  • It has also suggested the installation of batteries to ensure storage of power.
  • It also directs Rajasthan’s cash-strapped discoms to seek corporate social responsibility (CSR) funds for the solarising drive. Further, it allows the school’s ownership of the power systems in a phased manner. 
Challenges faced by the Power Sector at present
  1. Fuel Security Concerns: Thermal capacity addition is plagued by the growing fuel availability concerns faced by the Industry. A significant natural gas-based capacity of more than 20,000 MW is idle due to the non-availability of natural gas. Coal supply is restricted, leading to increased dependence on imported coal with the cascading result of high power generation costs.
  2. Transmission & Distribution Losses: High distribution-line losses are among the most vexing problems in the Indian power sector. India’s aggregate technical and commercial losses average about 32% of electricity, which is very high as compared to those of the developed countries (6-11%).
  3. Financial Health of State Discoms: Years of populist tariff schemes, mounting losses and operational inefficiencies have adversely affected the financial health of State Discoms which are currently plagued with humongous out-standing debts.
    • Ujwal DISCOM Assurance Yojana (UDAY) scheme was introduced by the centre to bring financial Turnaround, Operational improvement of Discoms. Further, it aims to reduce the cost of generation of power, to facilitate the development of Renewable Energy and Energy efficiency & conservation.
    • Though some states witnessed an improvement in their financial and operational indicators, it wasn’t sustained. There has been a sharp deterioration in several parameters after the UDAY scheme.
  4. Ageing Power Plants and Transmission network: Since most of the power plants and transmission lines have been installed immediately after independence, they have become old and inefficient. This is the main reason for the low growth and transmission rate in electricity generation and transmission during recent years. About half of the power plants need to be upgraded or shut down as quickly as possible.
  5. Under-procurement of Power by States: Increasing power generation costs due to limited fuel availability, the poor financial health of State Discoms, have contributed to suppressed demand projections by State Discoms.
  6. Interstate Disputes: India is a federal democracy, and because rivers cross state boundaries, constructing efficient and equitable mechanisms for allocating river flows has long been an important legal and constitutional issue. Due to this, there is non-availability of water all the time to operate hydro plants. Inter-state disputes also restrict the excess power exchange between the states. For example, the Mahanadi water dispute, the recent Krishna-Godavari Dispute.
  7. Policy Paralysis: The micro-level policies governing the fuel cost pass-through, mega power policy, competitive bidding guidelines are not in consonance with the macro framework like The Electricity Act 2003 and the National Electricity Policy.
  8. Coordination Issues: Multiple ministries and agencies are currently involved in managing energy-related issues, presenting challenges of coordination and optimal resource utilisation, hence undermining efforts to increase energy security, as reported by the Kelkar Committee in 2013.
Significance of the RERC Order to power sector
  • First, it has the potential to electrify about 1,500 government-run schools in the remote parts of the State with roof-top solar panels and generate about 15 megawatts (MW) of power.
    • This would help Rajasthan in achieving its ambitious target of producing 30 GW of solar energy by 2025.
  • Second, battery storage of power ensures that they cater to children’s after-school activities. 
    • Schools could also extend power supply to mid-day meal kitchens, toilets, and motorised water pumps and not limit it to powering school infrastructure.
  • Third, it would benefit several other crucial aspects of rural life as schools serve multiple purposes.
    • Government schools serve as public spaces in rural areas. They doubled up as COVID-19 care centres in the past year and have housed villagers from extreme weather such as storms and floods. 
    • Further, they also turn into polling centres during the election season.
  • Fourth, the use of CSR funds removes the burden of infrastructure development expenses on discoms and also ensures clean energy for the schools.
    • The power that is generated could also be counted towards the discoms’ Renewable Purchase Obligations (RPO). RPO is the proportion of power that distribution companies must procure from renewable sources.
  • Fifth, it encourages a decentralised model of power generation, which is more climate-resilient.
    • A greater number of public buildings could use this model used to install roof-top solar panels. Buildings such as primary health centres, panchayat offices, railway stations and bus stops could easily be transitioned to utilising clean energy. 
    • With battery storage, the susceptibility of grid infrastructure to extreme weather events could be mitigated. This is called climate proofing.
    • Earlier this year, the American State of Texas witnessed a power blackout after an extreme weather event. This was due to inadequately climate-proofed natural gas equipment, which supplied domestic electricity.
  • The discoms could work with the State’s Education Department to determine the schools that require electrification, and their expected demand and infrastructure expenses. 
  • They could then cooperate with the CSR arms of companies to generate funding, and with industry to produce cost-effective solar photovoltaic panels and batteries.
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