July 2021

One of the most important developments over the past month has been the launch of a new big-ticket power distribution scheme, with an outlay of over Rs 3 trillion.

The Reforms-Based and Results-Linked Revamped Distribution Sector Scheme joins the long list of schemes and programmes that have been launched over the past decades to revive the ailing discoms. Unlike earlier schemes, however, this latest scheme promises a customised approach for each state rather than a “one-size-fit-all” approach. It envisages a reduction in AT&C losses to 12-15 per cent by 2024-25 and lays considerable emphasis on smart metering. With facilitative mechanisms and funding support, the new scheme provides discoms another opportunity to turn the corner but, as always, on-the-ground implementation will hold the key to its success.

Meanwhile, on the generation front, TPPs are lining up investments for the installation of SOx and NOx control equipment. Although the environment ministry has recently extended the deadline for meeting the emission norms by TPPs, it has also introduced a penalty mechanism, wherein a levy of Re 0.05-Re 0.20 per kWh will be imposed on power plants for non-compliant operations beyond the timeline.

However, the compensation mechanism to recoup the emission equipment costs in tariffs is yet to be finalised by the central regulator. This is crucial to allay the concerns of lenders, which have been reluctant to give credit to the thermal power segment to implement SOx and NOx control technologies. TPPs are also facing delays owing to supply chain disruptions due to the Covid-19 pandemic, equipment import restrictions, minimum local component requirements and the liquidity crunch.

These challenges notwithstanding, the adoption of these technologies is bound to pick up in the near future as thermal gencos strive to make their operations cleaner to meet the norms. This, in turn, will provide ample opportunities to equipment and technology providers, which have been reeling from low demand for main plant equipment, as renewables have displaced thermal power in new capacity additions.

Power Line’s special section on SOx, NOx Control provides an overview of the key emerging trends and developments in this space.

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