25 Events that Shaped the Sector: Change in the making

Change in the making

Power Line recalls the 25 most crucial events that changed the sector over the years. Events that ushered in path-breaking reforms, marked the commissioning of world-class projects, introduced and scaled up private participation, created key institutions, paved the way for a sustainable energy future, shook up the sector and shaped it into what it is today…

Unbundling of the SEBs (1995)

The SEB restructuring and unbundling pr-ocess, which began almost two decades ago with Odisha in 1995, was one of the most crucial components of po­wer sector reforms. A new class of corporatised entities was created with the unbundled SEBs, which demonstrated clear im­provements over the vertically integrated boards, in terms of operational, financial, commercial and customer service parameters.

Setting up of the CERC (1998)

The setting up of the Central Electricity Re­gu­latory Commission (CERC) following the en­actment of the Electricity Re­gu­latory Com­­­missions Act, 1998, was a key regulatory milestone for the sector. Assigned to play a parenting role in the regulatory setup, the CERC has helped bring in competition, transparency and effici­ency in the sector.

Introduction of ABT (2000)

At a time when regional overdrawals were quite frequent, the introduction of availability-based tariff (ABT) in 2000 was an important step towards maintaining grid discipline. ABT essentially provided a frequ­en­cy-dependent system to calculate tariffs, besides mandating generators to commit to day-ahead schedules through a system of in­cen­tives and disincentives. Later in May 2010, the CERC introduced the Indian Elec­tri­city Grid Code regulations to tighten the operational frequency band.

Shutting down the Dabhol plant (2001)

For all the hope that it epitomised, in 2001, the Dabhol power project came to a grinding halt as payments from the erstwhile Maha­rashtra State Electricity Board dried up. The project’s promoter, Enron Corporation, subsequently announced its decision to quit the project. With this, the future of India’s largest foreign direct investment came into sharp focus. This event also made a serious dent on India’s IPP dreams at the time.

Privatisation of DVB (2002)

At a time when the distribution sector in Del­hi was reeling from aggregate technical and commercial (AT&C) losses ex­cee­ding 50 per cent and accumulated losses over Rs 230 billion, the idea of privatisation of the erstwhile Delhi Vidyut Board (DVB) was mooted. Tata Power and Reliance owned-BSES were roped in to form jo­int ventures with the state government in 2002. In less than five years, the privatisation showed remarkable results and the model, till date, represents one of the big­gest success stories of public-private partnership in the country.

Passage of the Electricity Act (2003)

The single most important legislative development in the power sector, the Electricity Act, 2003 completely chang­ed the rules for the sector. It liberalised and delicensed generation, did away with the requirement for techno-economic clearances (except for hydro projects), freed captive plants from controls, and allowed IPPs to sell power directly to consu­mers without having to go through SEBs, etc. It was the sector’s first solid step towards an efficient and competitive electricity market.

Award of UMPPs (2006)

The two ultra mega power projects (UMPPs) that were set up – Reliance Po­w­er’s Sasan and Tata Power’s Mundra – are recognised industrywide as marquee projects that have set new benchmarks in many respects. The origin of these projects goes back to 2006 when the government kick-started the process of awarding UMPPs to enable capacity addition in large doses by handing over projects with all clearances in place to private investors.

Notification of the Tariff Policy (2006)

Another important legislation for the po­wer sector after the Electricity Act was the Nat­io­­nal Tariff Policy, 2006. Wi­th the launch of the policy, there was greater clarity on the broad principles to be followed for tariff de­termination. It marked the beginning of the multiyear tariff framework in the sector; boosted competition, making competitive bidding mandatory; set service standards for distribution; and extended grid discipline to the state level.

Launch of the R-APDRP (2008)

With a huge capital outlay of Rs 500 billion, the revamped version of the APDRP was launched in 2005 with the aim of bringing down AT&C losses to 15 per cent by the end of the Twelfth Plan period. Even though the target was not met, the utilities were pushed to have basic IT and automation solutions.

Debut of power exchanges (2008)

Prior to the power exchanges, there was no el­ec­tronic platform for power trading. After many years of groundwork, the two power ex­changes, IEX and PXIL, made their debut in 2008, and an automated and transparent me­chanism for short-term power trading was created. With a vast portfolio of products that cater to a wide range of participants, the exchanges have contributed to a vib­rant marketplace.

Setting up of the NLDC (2009)

Apart from guiding and managing po­wer generation, the setting up of the state-of-the-art National Load Despatch Centre (NLDC) in 2009 helped in ensuring synchronous ope­ration of the national grid as well as smooth po­wer transfers across the five RLDCs and SLDCs. Further, many important projects, such as WAMS and PMUs, were implemented to improve NLDC’s capabilities.

Launch of the JNNSM (2010)

More than a decade ago, it was hard to belie­ve that the solar sector, which contributed aro­u­nd 10 MW of installed capacity, could attain more than 20 GW of capacity by 2022, an am­bi­­­tious target set un­der the Jawaharlal Ne­hru Na­tional Solar Mission launched in 2010. Since then, growth in the sector has beaten the ex­pectations of most. The mission has also influenced several states to come up with their  own policies.

APTEL order on suo moto tariff revision (2011)

The Appellate Tribunal for Electricity’s (APTEL) ruling in 2011 was a landmark in the distribution segment as it made tariff revisions mandatory. APTEL or­der­ed the state electricity regulatory co­m­missions to notify suo moto tariff orders if the respective discoms failed to file their tariff petition annually. Following the ruling, tariff revisions became more regular.

Mandatory shift to competitive bidding (2011)

While the National Tariff Policy, 2006 led to a shift to the competitive bidding regime, discoms continued to procure power on a cost-plus basis from public sector generators until as recently as December 2010. However, this changed after the decision of the Ministry of Power to implement this regime for all thermal and transmission projects mandatorily from Ja­n­uary 2011. The market has since then mo­ved to a competitive bidding mechanism that has helped in driving down tariffs.

PAT scheme (2012)

The Bureau of Energy Efficiency’s Perform, Ac­hieve and Trade (PAT) scheme, launched in 2012, helped bring energy savings to centre stage. A key highlight of the scheme was ESCerts trading, which allowed in­d­us­tries to mo­netise their energy efficiency investments. With every new PAT cycle, industries have tri­ed to introduce new technologies to meet en­ergy saving targets, thereby reducing emiss­ions and helping the country inch towards the Paris Agreement commitments.

Northern grid collapse (2012)

In the world’s worst blackout in recent times, India’s northern, eastern and nor­th-eastern grids collapsed in July 2012, plunging 21 states and over 600 million people into darkness. The grid collapse acted as a wake-up call to es­ta­blish a strong and resilient power transmissi­on network in the country. The incident was followed by initiatives such as islanding sche­mes and greater grid automation and monitoring.

Creation of a national grid (2014)

With the commissioning of the 765 kV Rai­chur-Solapur transmission line, the southern region was connected to the central grid on December 31, 2013, the­re­by achieving the “One Nation, One Gr­id, One Frequency” goal. This was a sig­ni­ficant milestone in the power sector as it aid­ed power flow to the deficient southern region.

Cancellation of coal blocks (2014)

The Supreme Court’s order of 2014 directing the cancellation of the allocation of 214 captive coal blocks owing to irregularities in allo­ca­tion was a major blow to the sector that was alrea­dy reeling from fuel shortages. A spate of coal reforms to increase transparency in the sector ensued.

Scaling up of renewable energy targets (2015)

In January 2015, the government laun­ched the world’s largest clean energy pro­gramme by scaling up the renewable energy target to 175 GW by 2022, comprising 100 GW from solar, 60 GW from wind, 10 GW from bioenergy and 5 GW from small-hydro po­wer. This target was later increased to 450 GW by 2030. On the back of these targets, the sector has grown by leaps and bounds in just a few years and crossed the 100 GW milestone in 2021.

UDAY roll-out (2015)

The Ujwal Discom Assurance Yojana (UDAY) was launched in 2015 and was touted as the centrepiece of reforms. Discoms were envisaged to turn around operationally and financially under this scheme. UDAY ended in 2019 and could not fully meet its targets – to reduce AT&C losses to 15 per cent and the revenue gap to zero by March 2019 – although some improvements were recorded. Unfortunately, the discoms were back in a debt trap, with debt levels higher than their pre-UDAY levels and huge outstandings to power generators.

Notification of new emission norms (2015)

In one of the most decisive policy actio­ns to curb pollutants from TPPs, in December 2015, the environment ministry laid down new and stringent emission reduction norms. TPPs were re­qu­ired to drastically cut down their air em­issions and water consumption by 2017, necessitating investments in a range of pollution control technologies. The deadline for meeting the norms has, however, been pushed back a couple of times, and plants now have time till 2023-24 to comply.

Saubhagya (2017)

The Pradhan Mantri Sahaj Bijli Har Ghar Yo­jana (Saubhagya) is lauded as the biggest electrification drive of its kind, delivering the fastest expansion of electricity access. The scheme was launched in 2017 with the objective of achieving universal household electrification through last-mile connectivity. Having achieved its objective in 2019, the scheme has set the stage for the crucial task of ensuring 24×7 quality power supply for all.

Covid pandemic (2020)

When the Covid-19 pandemic upended nearly every sector of the economy, power utilities rose to the challenge and ensured uninterru­p­ted supply throughout the crisis, while ensuring safety of their personnel. A greater challenge for the sector was to cope with the financial impact of the crisis on account of subdued commercial and industrial power dema­nd. The government infused more than Rs 1.2 trillion in stimulus measures, specifically for state discoms to address their cash flow challenges. The sector also saw a major technology transformation during the crisis.

Privatisation of Odisha discoms (2020)

In 1999, Odisha was the first state to opt for discom privatisation. The attempt, however, failed when the distribution licensees operating with CESU-AES Corporation and BSES could not pay their power dues a few years post oper­ation. Notwithstanding these setbacks, in 2017, another attempt was made at privatisation. The sale of distribution licences for the state’s three discoms was successfully concluded in 2020 and 2021 with Tata Power emerging as the winner, marking a major event in the history of distribution privatisation in India.

Revamped power distribution scheme (2021)

In the fourth attempt to turn around the pow­er distribution segment, the results-linked Re­vamped Distribution Sector Sche­me, with an enormous corpus of over Rs 3 trillion, was la­unched in 2021. Since the new scheme is re­forms based and results linked, it does seem to have the right ingredients to make a big difference in the distribution segment. Instead of a one-size-fits-all approach, this scheme will notably be based on an action plan worked out for each state.