States Propose Listing Power Utilities to Raise Funds for Electricity Demand Investment

Union Power Minister Manohar Lal stated that some states plan to list power utilities to generate funds. This move is in response to the anticipated need for a Rs 42 lakh crore investment by 2030 to meet increasing power demands. In May, India recorded a peak demand of 250 GW, predominantly met by fossil fuels, with renewable sources contributing the rest.

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Addressing state power ministers, Lal highlighted the necessity for substantial funding to cater to the growing electricity needs. Gujarat and Haryana have proposed listing their power utilities on stock exchanges as a fundraising strategy. However, he noted that while transmission and generation companies can be listed, distribution companies must first improve their rankings.

Investment and Financial Strategies

The minister also discussed the financial health of the distribution sector, which is crucial for the power sector's growth. He mentioned that some states are considering splitting Aggregate Technical & Commercial (AT&C) losses into technical and commercial categories to find reduction strategies. AT&C losses rose to 17.6% in 2023-24 from 15.4% in 2022-23.

Lal pointed out improvements in the ACS-ARR gap, which decreased to Rs 0.21/kWh in FY2023-24 from Rs 0.45/kWh in FY2022-23. He urged states to ensure timely payment of government dues and subsidies, suggesting a centralised payment mechanism and prepaid smart meters for government offices by March 2025.

Technological Advancements and Initiatives

To encourage smart meter adoption, states may offer a 5% rebate to prepaid consumers and engage effectively with them. During the launch of Powerthon Phase-II, Lal announced support for innovative AI-based solutions for discom challenges. Up to Rs 37 crore will fund 40 technology solutions, with Rs 6 crore allocated for scaling existing solutions from Phase I.

A combined ranking methodology has been developed for discoms to foster healthy competition, with the first ranking expected by January 2025. Lal suggested promoting rooftop installations under the PM Surya Ghar Yojana and focusing on nuclear power plant capacity expansion from 8 GW to 20 GW by 2032.

Nuclear Power and Renewable Energy Integration

States distant from coal sources should consider nuclear plants at sites where coal-based plants have ended their lifecycle. Lal emphasised developing Pumped Storage Projects (PSPs) and Battery Energy Storage Systems (BESS) in renewable-rich areas to manage peak demand during non-solar hours and integrate renewable energy into the grid effectively.

The capacity is projected to increase from around 5 GW to 27 GW by 2032. The ministry supports installing a BESS capacity of 12 GWh under the Viability Gap Funding Scheme. States are advised against imposing water-cess or similar charges on power generation.

Lal's remarks underscore the importance of strategic investments and technological advancements in meeting India's future energy needs while ensuring financial stability within the power sector.