Government working on national scheme for power distribution with focus on renewable energy capacity

New Delhi: The Central Electricity Authority (CEA) is working on a national scheme for power distribution for the first time as it focuses on creating 600 GW (gigawatt) of renewable energy capacity to meet rising demand in the country, union power minister Manohar Lal said.

India will need to generate about thrice the country's electricity demand by 2047 compared with almost two times the demand now, the minister said at the launch of the CEA's plan for electricity transmission till 2032 in New Delhi on Monday.

“The CEA's plan, which envisions peak power demand to be 708 GW by 2047, would also need help from the private sector as well as states. I have also learned that the CEA is working on a Rashtriya Bijli Yojana (National Electricity Plan) for distribution for the first time,” Manohar Lal said.

India's peak power demand touched 250 GW in May this year, when the installed power generation capacity was 453 GW, data presented by the CEA showed. India would need as much as 2,053 GW of installed capacity to accommodate peak power demand of 708 GW by 2047, the CEA said.

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The central government agency, which is a policy advisor on electricity, set a target of creating 500 GW of non-fossil fuel energy capacity by 2030 in its national electricity plan for transmission unveiled on Monday. This would increase to 600 GW by 2032. This plan would create an investment opportunity worth ₹9 trillion, the CEA said in a presentation.

Helping discoms

Electricity distribution is a state subject. Over the past decade, the central government has provided financial assistance to the states for electricity distribution through a scheme for rural electrification in 2014 with a total outlay of over ₹44,000 crore, as well as a scheme for urban electrification and digital metering in the same year with an outlay of over ₹32,000 crore.

The central government also operates a National Electricity Fund to provide interest subsidy on loans disbursed to distribution companies (discoms) in an effort to facilitate power distribution to areas not covered in the central government's rural or urban distribution schemes.

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The government's Revamped Distribution Sector Scheme (RDSS) aims to reduce power losses from discoms. RDSS has set a target of 12-15% of aggregate technical & commercial (AT&C) losses for FY25. AT&C losses refer to the difference between the amount of electricity a discom receives and the amount of electricity it bills its customers. RDSS helped cut the government's AT&C losses from 22.32% in FY21 to 15.4% in FY23.

The government's renewable energy push for power generation as well as energy storage would propel the need for both pumped storage projects (PSPs) as well as battery energy storage systems (BESS), Manohar Lal said, adding that BESS should become more affordable to reduce the burden on PSPs.

In India, PSPs and BESS are the two key forms of energy storage systems that reduce peak electricity demand and the strain on grids and may reduce power prices.

About 4.7 GW of PSP capacity has been installed and 6.47 GW capacity is under construction, with 60 GW under various stages of survey and investigation, the minister said in September.

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According to the National Electricity Plan 2023 to 2032 for Central and State Transmission Systems, peak demand is estimated at 458 GW by 2032, the power ministry said on 23 September. A transmission network of 335 GW is planned to carry 280 GW of variable renewable energy to the Inter-State Transmission System (ISTS) by 2030, it said.

Secretary of the department of water resources, river development and Ganga rejuvenation in the ministry of jal shakti, Debarshee Mukherjee, highlighted the role of water supply in power generation and said PSPs were crucial for energy storage. 

She said climate change and heat waves were a concern, adding that during the heatwave this year, pumping requirements for domestic water supply in Delhi accounted for 40% of the national capital's total energy use.