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Powerline | Response to Questions

Power sector in India in the FY 2023 has been a happening year in many ways. Power generation has grown...

• What is your assessment of the power sector’s progress during the past year?
Power sector in India in the FY 2023 has been a happening year in many ways. Power
generation has grown between 8 – 10% across sources showcasing the rising demand in India.
At the same time, many states have managed to reduce their AT & C losses significantly,
bringing the overall national average to about 17%. Baby steps in the areas of smart metering
taken in earlier years have gathered pace and some of states have been able to make notable
progress. Further, schemes like PLI for manufacturing of high efficiency solar modules are
likely to give a boost to domestic manufacturing, which is lagging, especially in RE sector.
On the other hand, government has given positive indications about more and more close
integration of grid in south Asia and eventual electricity trade in the form of notification of
new regulations and MoUs. Further, after a long time, thermal power has made a comeback
and new super critical capacity additions are being planned. Moreover, addition of RE
capacity and corresponding requirement of storage solutions have received keen focus and
FY 23 has seen huge activities in PSP sector.
• What are the biggest unresolved issues facing the sector?
Some of the biggest unresolved issues for power sector in India are as below:
1) Further Improvement in Financial Health of DISCOMs: While significant
improvement has been made in distribution sector in India where aggregate AT & C
losses have declined to an overall average range of 17%. To achieve a further decrease
from current levels to upto 12 – 15% over next 2 – 3 years, steps like i) modernisation
of distribution infrastructure, ii) smart metering, iii) Time of the Day metering are
needed.
2) Faster implementation of storage solution: Considering the overall target of addition
of 500 GW RE capacity by 2030, new challenges in the form of grid stability and load
management are coming up. Therefore, faster implementation of affordable storage
solutions, including Battery and Pumped Storage is the need of hour. Furthermore, in
order to improve their viability, new commercial solutions in the form of monetisation
of ancillary services (spinning reserve, reactive power, peaking supply etc) is the need
of the hour.
3) Matching Investment in transmission & Distribution infrastructure: Huge generation
capacity addition in power sector is likely to pose challenges for transmission and
distribution sector. Further, investment in transmission & distribution sector,
especially in the smart network is need of the hour to herald next generation of reforms
in the sector in India.
• What is the investment outlook for the sector in the next 1-2 years?
Power sector in India is now geared to retake its journey into the future. While there is
expected to be more and more capacity addition in RE space, increased activity in emerging
sectors such as energy transition, smart metering and storage solutions shall also be
witnessed. In addition to this, investment in supporting infrastructure, especially, in the fields
of transmission and distribution, corresponding to higher installed capacity is also expected

to increase. Moreover, associated sectors like EV and EV charging are also expected to witness
fast paced investment. Besides these new sectors, considering the huge demand jump and
slippages in capacity addition targets of non-conventional sector, some investment in
conventional hydropower and coal based thermal generation sector is also likely to be
witnessed. Therefore, the short to medium-term investment scenario for power sector in India
is optimistic.

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