There seems to be a lot of focus on India’s Power Sector these days with the government seriously considering changes [good or bad can be analysed separately] to finally put this sector on the right path.
Recently the Power & Coal Minister of India, Mr. Piyush Goyal has said that the government is looking to separate the content from the carrier. The objective is to to fix electricity distribution space; an often neglected part of the Indian power sector.
The government is making necessary amendments to the Electricity Act to encourage greater competition in the distribution sector. Gradually the end users will be able to select their power distribution firm. But challenges still do exist on the policy front and on the technically implementing these concepts on the ground.
At the same time, MNRE has also announced that it is planning to raise the mandatory solar RPO requirement for the power distribution companies to 10.5 per cent from the current 3%.
In addition, the government is working on a renewable energy policy or renewable energy act.
Meanwhile in yet another development, update is that the government is likely to revise power contracts between generation and distribution firms to lower electricity tariffs from plants that will run on coal from captive blocks. This will happen after allocation of the coal blocks.
While I am not an expert on the coal blocks story, the focus on the power distribution side is applauding. This can bring about competition in retail power segment and slowly bring a change in attitude on the topic of energy efficiency among consumers. How this impacts the solar rooftop space will be clear only later when the exact changes in the Electricity Act are known and analysed.
The RPO news seem exciting, pushing discoms to further build their own renewable energy projects giving a boost to Indian power/solar equipment companies. The other option is to buy RECs from the market. Seems like a good move but don’t forget to consider the situation of investors who have burnt their fingers in solar REC projects.