India’s new power tariff policy: Will it boost investment into the renewable sector?

  The Centre has unveiled a new power tariff policy which allows 100 per cent expansion by existing power plants, passing on levies to consumers and purchase of 100 per cent electricity produced from waste.
A holistic view of the power sector has been taken and comprehensive amendments have been made in the Tariff policy 2006. Aim is to achieve the objectives of Ujwal Discom Assurance Yojana (UDAY) with the focus on 4 Es that is Electricity for all, Efficiency to ensure affordable tariffs, Environment for a sustainable future, Ease of doing business to attract investments and ensure financial viability.
Under the first E (Electricity for all), the policy is aiming at 24/7 supply to all consumers and state governments and regulators will devise a power supply trajectory to achieve this. Under the second E (efficiency), 100 per cent expansion of existing plants will be allowed because it is always easy to go for brown field expansion as these already have clearance like environment and forest approvals. Under third E (Environment), the tariff policy provides that under the renewable Power Obligation (RPO) 8 per cent of electricity consumption excluding hydro power, shall be from solar energy by March 2022. Under the RPO, the discoms are required to either buy certain proportion of their purchases from renewable source or buy RPO certificates.
The new power tariff policy also provides for the Renewable Generation Obligation (RGO) under which new coal and lignite based thermal plants after specified date will establish, procure and purchase renewable capacity. The policy also provides for affordable renewable power through bundling of renewable power with power from plants whose PPAs have expired or completed their useful life. It also provides that no inter-State transmission charges and losses are to be levied for solar and wind power. The new policy also states that States should endeavour to procure power from renewable energy sources through competitive bidding to keep the tariff low, except from waste to energy plants.  This will help reducing the cost of power and will enhance the quality of power supplied. Also distribution companies will be incentivised if central government allows progressive increase the tariff of the power from time to time.
In order to promote renewable energy sources, any generating company proposing to establish a coal or lignite based thermal generating station after a specified date shall be required to establish such renewable energy generating capacity or procure and supply renewable energy equivalent to such capacity, as may be prescribed by the Central Government from time to time after due consultation with stakeholders. Under the fourth E (Ease of Doing Business), the policy provides the regulatory framework for producing power.
– Kailash Lal Tarachandani, CEO, Inox Wind Ltd