EQ’s exclusive webinar on Draft National Electricity Policy 2021 was conducted on May 24, 2021 at IST 04:00 PM. The expert panellists shared their views on the Draft National Electricity Policy 2021 in detail and discussed on related topics.
D. Ramanaiah Setty, Deputy Director (Tariff Engg.), Andhra Pradesh ERC was the Keynote Speaker in the webinar. Tagore Yaragorla, VP, Legal, SB Energy (SoftBank Group) participate in the webinar as the Moderator.
Samridha Neupane, Partner Designate, Luthra & Luthra, Naved Askari, Partner, LexRidge Partners, Advocates & Solicitors, Aditya K Singh, Associate Partner, Link Legal, Balawant Joshi, Managing Director, Idam Infrastructure Advisory Pvt. Ltd, Shuboday Ganta, Vice President, Ernst & Young and KN Sharma , Head Growth & Strategy at Sunsure were the other speakers of the panel.
D. Ramanaiah Setty, Deputy Director (Tariff Engg.), Andhra Pradesh ERC explained the complete background of this policy in detail. He explained the importance of the National Electricity Policy.
He presented a complete glance at it. He said, “Before going to the Draft Policy, let us understand the present policy issued in 2005. It provides a roadmap for the next 10 to 15 years on how these sectors should move and what are the developments that should take place in next 10 to 15 years.”
“I will recap the objectives and the areas covered in the policy 2005 before going to the points of the policy 2011. So, the main important objectives of the earlier or present electricity policy are Access to Electricity, Availability of Power, Financial Turnaround and Commercial Viability of Electricity Sector and Protection of consumer’s interests.”
“Accordingly, they have covered Rural Electrification, Generation, Transmission, Distribution, Recovery of Cost of Services & Targeted Subsidies, Technology Development and Research and Development (R& D), Competition aimed at Consumer Benefits, Financing Power Sector Programmes Including Private Sector Participation, Energy Conservation, Environmental Issues, Training and Human Resource Development, Cogeneration and Non, Conventional Energy Sources, Protection of Consumer interests and Quality Standards. Almost, the policy has achieved its objectives at most parameters.”
He discussed on India and Paris Agreement along with its related targets. He further informed, “The important objectives in Draft Policy 2021 are to promote the clean and sustainable generation of electricity, development of attainment and efficient transmission system, revitalization of DISCOMs, development of efficient markets for electricity, supply of reliable and quality power of specified standards in an efficient manner, move towards light touch regulation, promotion of manufacturing of goods and services in India in the Generation, Transmission and Distribution segments of the power sector under the Make in India initiative and Aatmanirbhar Bharat Abhiyan.”
“Accordingly, they have focused on Optical generation Mix, Transmission, Distribution, Grid operation, Power markets, Regulatory Process, Research and Development (R&D) and adoption of new technologies, Power Quality, Energy Conservation and Energy Efficiency, Environmental Issues, Skill building and Human Resource Development, Creation of Electric Vehicle Charging Infrastructure, Make in India initiative and Atmanirbhar Bharat Abhiyan and Disaster Risk Reduction.”
Ramanaiah Setty discussed these points in detail. He further talked about the main purpose of reviving the policy, important points under the areas covered by the electricity policy and also discussed some points which helped in the development of the policy. He also shared the views of the stakeholders on the policy.
He said, “There should be harmonization between Electricity Act, tariff policy and the Electricity Policy. These three should supplement each other but should not compliment, here is a feeling that the present policy is exhaustive. It shall be a quick expander, focused on providing broader clear policy directions and targets. The advanced integrated power system planning is the need of the hour.”
He covered, Section 63 is completely bidding guidelines. Once it is measured and awarded, the tariff adoption should be a clear process. He also touched on the point of whether the bifurcation of the RPO is required or not. He said that largely the points in the policy are good for the industry.
Balawant Joshi, Managing Director, Idam Infrastructure Advisory Pvt. Ltd discussed the requirements of the industry specifically the manufacturers, generators and DISCOM’s.
He raised couple of issues saying, “The Electricity Act Amendment Bill has been issued. Now, it is obvious that the Act will take precedence over policy.
The act and the Draft Policy are under discussion. So, there is confusion for people working in the regulatory sector in terms of what exactly would take place and what the government is going to push. If the amendment Act is going to push for then the policy would certainly have to undergo change.”
“So, I think, the first and foremost issue is that government has to broadly clarify in terms of the Act, Policy, what or how would they like to push and if they want to do this, what is the purpose behind it.” He broadly presented the regulatory views of the policy as an expert in the energy sector. He discussed the primary goals of the Electricity Policy 2005 to provide electricity connection to everyone. He spoke on the policy evaluation.
He said, “The primary goal of the policy should be to protect the interest of the electricity consumer. Has that happened? That kind of evaluation is needed.
If that has not happened, why it has not happened? Why there have been increases? Like after Uday 1, why are we are talking about Uday 2? Because of COVID, we have provided a 1.3 lakh crores package to the distribution sector. Why that situation has come up? Do we have answers to the issues in the draft policy?
Unfortunately, I don’t see answers to that one so I couldn’t say that this is expected to win the tariff policy and not into the Electricity Policy. That is the bigger issue. Can we afford to have 50 thousand crores or one lakh crores every three to four years to be given as a bailout package to the distribution sector?”
“Evaluation of the existing policies in an impartial and unbiased manner is lacking. Not only in this but other sectors as well but this is something that is required.
How do we make this Electricity Policy implementable? It’s the guiding factor for the regulatory commissions and it has remained the guiding factor. That is the same issue with the tariff policy also. Mainly, the regulatory commission does not allow all the cost to be passed through.
They do not allow accrued losses to be allowed as a regulatory asset. They just remain on the balance sheet of the Distribution Company but not taken into consideration.”
He also pointed the light-touch regulation. “The basic question, how do you make NEP implementable? Can NEP notified by the Ministry of Power implementable? Why the tariff policy did not get implemented in its true spirit over the period of last 16-17 years.
Why regulatory commissions are not issuing orders on the regular basis. Why we have not got some basic fundamental principles of the tariff set right?”
“This is my prescription, the issue is that we really need a consensus making body to be able to implement the electricity sector reforms. The electricity sector is on the concurrent list and the issues can’t be settled by way of notification by the central government. We need a different way of approaching this.
We probably need a national electricity council similar to the GST council. Not duplicate but on the concept of GST council so that the decisions taken by the Electricity Council are implemented by all States and UTs.”
He also talked about the issue of Thermal Vs RE generation and RPO targets. “The fourth guiding factor for the Electricity Policy should be overall economy of the cost without private or public sector.”
Samridha Neupane, Partner Designate, Luthra & Luthra shared his thoughts on the policy. “I think, what needs to be kept in mind is the technology and market are developing at a relatively fast pace. Therefore, there should be more periodic updates. The Draft Electricity Policy covers multiple areas and I will be touching some of the key areas.”
“This draft encourages renewable energy and energy storage with more impetus on hybrid renewable energy. It states that the hybrid operational variable renewable sources with conventional energy and energy storage will facilitate a self-balanced portfolio with round the clock power supply for everybody.
The draft then emphasizes on procurement of power from renewable sources to competitive bidding other than for a waste to energy which is at a fairly nice stage and it is a push from the government.
As a welcome change, there is more thrust on these must run state of these RE plants. The draft states that the tariff for RE power must cover the risk of power curtailment by DISCOMs unless it is on account of great security or something like that.”
“The draft also touches upon waste heat recovery mechanism. On the RPO and REC, the draft asserts that the two mechanisms do not function satisfactory and therefore it suggests exploring market based options while removing the shortcoming in the RPO and REC systems.
The draft suggests moving towards implementing a light touch regulation mechanism. However, allowing the market to take proceedings over this entire REC mechanisms could certainly lead to issues in managing this system. The regulation should eventually provide for a wide margin of error margin in such forecasting for solar and wind projects.” He further discussed the draft policy and its key points in detail.
Naved Askari, Partner, LexRidge Partners, Advocates & Solicitors explained his views and problems stepwise. He discussed on the current mechanism in detail.
He said, “If we had a situation or at least we can work out a mechanism where the DISCOM are financially strong enough. Then maybe, we can drop off SECI and the tier system altogether. He said that along with attracting global investors, it is equally important to protect the investors in this group.
“What is most heartening to read in this kind of NEP is that they have a vision in terms of providing for electricity or the mechanism for the charging station and the charging points.
It is a matter of time that we will have the complete mushroom of the EV point. There will be challenges associated with it. What I really like about this is that the government is not just trying to ensure that what all are the current challenges. They are also trying to mitigate it through this policy.”
Mithun Dubey, Business Development, Strategy – REConnect Energy shared his views on how this policy will take our energy into a forward-looking sector. “We have to understand, where we started in 2005 and where we have actually reached in 2021. It is important to understand in terms of the roadmap that this policy lays for the next 10 to 15 years. I think, more or less we are in the right direction.”
“In last 15 years, we have increased in RE from almost one per cent to almost 10 per cent. With the ambitions and aims we have, the policy acknowledges and seems to be in the right directions.
It is very appreciable on the EV, RPO or other parts, everything is acknowledged but it is more like we have to ensure what is mentioned in the policy and what is actually being implemented on the ground.“ He also explained the distribution sector.
Aditya K Singh, Associate Partner, Link Legal spoke on various points. He shared his suggestions on improving RPO obligation. He spoke on the best way to enforce the RPO mechanism and whether the change in the law would be covered for the repowering one. He also discussed the tariff option- the process for the projects which were bided under section 63.
He said, “Whatever, we are witnessing today is entirely different from last five to six years. This is the first time a policy has recognized the concept of repowering.
I am encouraged by one paragraph of Draft NEP which says that the Electricity Commission should primarily verify compliance with the process. I have suggested replacing primarily with only.”
Shuboday Ganta, Vice President, Ernst & Young was the next speaker. He shared his thoughts on emerging issues especially in the context of the clean energy transition.
“This transition is happening in the power sector globally and even in India. This is primary driven by decarbonisation, decentralization and digitization. We call it three Ds. We have a greater chance to contribute to this transition, contribute to this sector meaningfully.”
He spoke on the ongoing clean energy transition, how Draft NEP 2021 is forward-looking and is it aligning with the ambition of the world, Indian utilities, rapidly changing market structure, policy and regulatory ecosystems, stakeholders and more.
“The policy has discussed some continuity in coal based power generation capacity addition and for the reason it states is it continues to be the cheapest source of generation.
We believe this is unfortunately not an accurate assessment due to various reasons.” He also spoke on the demand aspect and land use for power generation in detail.
KN Sharma, Head Growth & Strategy at Sunsure was the next speaker. He explained how the business house looks into this policy and what more is needed from the perspective of the policy.
He said, “Entrepreneurs have also focused on the solar. We have felt it was an uphill battle. While we are being keeping pace with the technology enhancement, we have seen customers also wanting to spend more to get better technology, especially in the distributed energy sector.
Most commonly, it has been the regulatory aspect which has impeded every year the potential growth at the distributed generation could have taken especially from the industrial and commercial perspective. Today, commercial and industrial entities in India can use solar power either by using their rooftop areas or if they happen to be in the right state, happen to have a load of more than 1 MW and happen to have a direct feeder, they can also avail open access.”
Tagore Yaragorla, VP, Legal, SB Energy (SoftBank Group) summed up the main points presented by the speakers. He concluded the session with an interactive Question and answer round.
