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Competitiveness is the cornerstone of the renewable sector

September 4, 2023 11:58 am

Competitiveness is the cornerstone of the renewable sector

The article explores India’s power distribution landscape, emphasising macroeconomic fundamentals. Brajesh Kumar, Sr. Vice President, Power Distribution, Apraava Energy, discusses growth potential, challenges, and opportunities in the renewable sector, focusing on competitiveness, regulatory policies, and distribution strategies for a sustainable energy future.

In the realm of power distribution, a nuanced perspective is essential. Fundamentals, often rooted in macroeconomics, must underpin discussions. With its substantial market potential and long-term regulations, India stands as a prime example. The gravity of its power distribution landscape is profound, with a population exceeding 1.3 billion demanding electricity access.

Renewable energy capacities

Examining demand reveals the dichotomy. While the US boasts a mature market, India’s electricity consumption is a mere third of that of developed economies. This glaring gap indicates significant room for growth. As industries flourish, manufacturing activities surge, amplifying supply pressure. Within this framework, India’s supply chain and local support shine, albeit with a reliance on China—a global trend not exclusive to India.

The narrative of catching up extends to critical systems like wind and solar power. Brajesh Kumar, Sr. Vice President, Power Distribution, Apraava Energy, briefly evaluates the insight into the sector’s internalisation and subsequent challenges mirror a broader narrative. Unsustainable tariff levels, exemplified by the wind industry’s FIT trajectory, underscore the necessity for adaptability. The path to sustainability, however, is marked by lessons learned and a focus on change management. Solar, though faced with import restrictions and China-related disruptions, is poised for a resurgence.

As the US navigated its energy evolution, Indian power utilities took centre stage, setting precedents in India’s renewable sector. A wave of government policy changes spurred overseas players’ interest, transforming the market into a global hub. This transformation is evident in the influx of foreign players, local platforms, and substantial global investments—a testament to the newfound attractiveness of the market.

Market dynamics exhibit a natural progression. Giants like Adani and ReNew diversify their operations, creating a compelling narrative of upward integration. The diversification trend extends to manufacturing turbines and machine components, solidifying India’s position as an emerging player in the renewable manufacturing ecosystem.

Policies for competitiveness 

Competitiveness, the cornerstone of the renewable sector, hinges on tariffs. Among the most competitive globally, India’s tariffs stem from judicious market dynamics and input cost considerations. Yet, the path from generation to consumption is riddled with inefficiencies. Thus, retail tariffs, though evolving, remain relatively unchanged over the years, hinting at the need for systematic reform.

Regulatory policies, the architects of market frameworks, wield significant influence. Competitive bidding, a cornerstone of India’s renewable market, finds support within regulations. The delicate balance between market discovery and regulation underscores the need for continuous evolution. The UK and Australian markets serve as benchmarks for India to glean best practices tailored to its unique context.

Strategising distribution patterns

However, the crux lies in the distribution area. Operational efficiencies, driven by a segregation of responsibilities, must underpin the power sector’s transformation. Franchising models, as seen in distribution, could herald a new era, ensuring accountability and competition while enhancing the consumer experience.

India’s power distribution landscape is laced with opportunities and challenges. Macroeconomic fundamentals drive demand, and as industries expand, supply dynamics evolve. International players find resonance, signifying India’s transformation into a global renewable hub. However, the journey is fraught with complexities. The path to sustainability necessitates tariff rationalisation, while regulatory frameworks require a fine balance. The evolution of the distribution sector stands as a testament to India’s commitment to efficient, accountable, and competitive energy delivery.

As we navigate this ever-evolving energy landscape, the lessons learned and experiences gained will inevitably shape India’s trajectory toward a cleaner, more sustainable energy future.

(This article is based on a submission delivered by Brajesh Kumar, Sr. Vice President of Renewable Energy, Apraava Energy, during the EPR Power Talk focused on “Exploring the Future of Alternative Energy”). 

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