Draft National Electricity Plan


    In Context

    • Recently the Central Electricity Authority (CEA) has put up the ‘Draft National Electricity Plan‘forr feedback from stakeholders.

    Draft Highlights

    • Coal-based capacity:
      • It is seen that apart from the under construction coal-based capacity of 25GW, the additional coal-based capacity required till 2031-32 may vary from 17 GW to around 28 GW.
    • Additional requirements for coal-based plants:
      • The Central Electricity Authority (CEA) had suggested no fresh requirement for thermal power plants during 2017-22.
      • CEA is now projecting an additional requirement for coal-based plants in the upcoming five-year periods ending 2026-27 and 2031-32.
        • The above-mentioned power plants can expand the thermal capacity base by as much as 15 percent, a notable rise compared to FY17-FY22.
    • Battery Energy Storage System:
      • It is also seen that the BESS (Battery Energy Storage System) requirement in 2031-32 is varying from 51GW to 84GW, stated the document.
    • Hydro-based plants:
      • It also said that in the event of delay in achievement of hydro-based plants, which are in concurred/under construction stage, there is additional requirement of coal of around 4 GW in capacity mix in 2026-27.
    • Cheaper coal candidates:
      • In the event of non-availability of the base load nuclear capacity, the (study) model opts for cheaper coal candidates available to provide base load support.

    Power Sector in India:

    • India’s power sector is one of the most diversified in the world.
    • Sources of power:
      • Sources of power generation range from conventional sources such as coal, lignite, natural gas, oil, hydro and nuclear power to viable non-conventional sources such as wind, solar, and agricultural and domestic waste
      • The Indian power sector is undergoing a significant change that has redefined the industry outlook.
      • Sustained economic growth continues to drive electricity demand in India.
    • The electricity sector:
      • The electricity sector could be classified into three segments: 
      • Generation
        • Generation is the process of producing power using different sources of energy. 
      • Transmission
        • High voltage power is carried from the generation plants to the distribution sub-stations through a transmission grid. 
      • Distribution
        • Electricity is finally transferred from the sub-stations to individual consumers through a distribution network.  
          • Issues with distribution:
            • One of the key concerns in the power sector has been the financial health of the distribution companies (discoms), which are mostly state-owned.  
            • Discoms have had a high level of debt and have been running losses for the past several years.

    Central Electricity Authority (CEA)

    • About:
      • As per the Electricity Act, 2003, CEA has to prepare the National Electricity Plan once every five years.
      • The Act stipulates that CEA, while preparing the National Electricity Plan (NEP), shall publish the draft and invite suggestions and objections thereon from licensees, generating companies and the public. 
    • CEA officials:
      • Officers from the Central Power Engineering Services Cadre, recruited through Engineering Services Examination conducted by the Union Public Service Commission, are posted to the Central Electricity Authority of India.

    The Electricity Act, 2003

    • About:
      • The Electricity Act, 2003 is the central law regulating the electricity sector.
      • The Act provides for Electricity Regulatory Commissions at both the central and state levels (CERC and SERCs).

    The Electricity (Amendment) Bill, 2022 

    • The bill amends the Electricity Act, 2003
    • Key provisions under the Bill:
      • Multiple discoms in the same area:  
        • The Act provides for multiple distribution licensees (discoms) to operate in the same area of supply.  
        • The Act requires discoms to distribute electricity through their own network.  The Bill removes this requirement. 
        • It adds that a discom must provide non-discriminatory open access to its network to all other discoms operating in the same area, on payment of certain charges.  
      • Power procurement and tariff: 
        • Upon grant of multiple licenses for the same area, the power and associated costs as per the existing power purchase agreements (PPAs) of the existing discoms will be shared between all discoms.
      • Cross-subsidy Balancing Fund: 
        • The Bill adds that upon grant of multiple licenses for the same area, the state government will set up a Cross-subsidy Balancing Fund.  
        • Cross-subsidy refers to the arrangement of one consumer category subsidising the consumption of another consumer category.  
        • Any surplus with a distribution licensee on account of cross-subsidy will be deposited into the fund.  
        • The fund will be used to finance deficits in cross-subsidy for other discoms in the same area or any other area.
      • Renewable purchase obligation:
        • The Act empowers SERCs to specify renewable purchase obligations (RPO) for discoms. 
        • RPO refers to the mandate to procure a certain percentage of electricity from renewable sources.  
        • The Bill adds that RPO should not be below a minimum percentage prescribed by the central government.  

    Way Ahead

    • Electricity demand in the country has increased rapidly and is expected to rise further in the years to come. 
    • In order to meet the increasing demand for electricity in the country, massive addition to the installed generating capacity is required.
    • Suggestions:
      • Creating an enabling ecosystem to ensure power plants work efficiently.
      • Revisiting fuel allocation and supporting the priority dispatch of efficient plants could help India reduce coal demand by up to 6 percent of our annual requirement, and set aside more coal for the proverbial rainy day.
      • Enabling discoms to undertake smart assessment and management of demand.
      • Introducing time-of-day pricing and promoting efficient consumption behaviour would help shave peak demand and avoid panic buying in the market.
      • Empowering electricity regulators to help bring down discom losses. 
    • The ongoing initiatives like introducing smart metres and network strengthening, and empowering regulators would be critical to infuse payment discipline across the supply chain of the electricity sector and to keep cost recovery as a key metric.

    Source: TH