Led by the Minister of State for Power, the group is expected to submit its report by April 2025 but does not mandate a bailout for discoms. The move is part of broader reforms aimed at addressing financing and revenue concerns in the power sector.
A key indicator of financial improvement is the sharp reduction in dues from urban and rural local bodies, which have declined from ₹56,000 crore to ₹3,000 crore.
Additionally, the gap between the average cost of supply (ACS) and the average revenue realised (ARR) narrowed to 19 paise in 2023-24, reflecting better fiscal discipline. The ministerial group suggested that a public listing of discoms could further bolster their financial health.
India is also focusing on reducing power generation costs. The ACS for power is projected to decline by 2030, potentially affecting tariffs. Currently, nuclear power costs ₹6.70 per unit, and hydro power ₹6 per unit, both expected to decrease with increased utilisation.
Coal-based power remains at ₹5.50 per unit, while renewable energy remains the cheapest, with solar at ₹2.60 per unit and wind at ₹3.25 per unit, though availability depends on time-of-day factors. The government is closely monitoring fiscal prudence in power subsidies, cautioning states against excessive reliance on freebies.
To strengthen its energy infrastructure, India is accelerating power transmission projects, including undersea cables to Saudi Arabia, the UAE, and Sri Lanka as part of its “One Nation, One Grid, One Frequency” initiative.
Power projects worth ₹40,000 crore are in the pipeline for undersea transmission, with expansion plans also targeting Nepal, Bhutan, and Myanmar. India’s power exports currently stand at approximately ₹26,000 crore, with over ₹9 lakh crore of investment opportunities in the transmission sector.
However, challenges persist in expanding transmission capacity, which has lagged behind targets. Land procurement remains a significant hurdle. To address this, the government has increased compensation for farmers from 80% to full market rates.
Additionally, the Power Ministry plans to procure land for transmission lines in urban areas under a revised policy that considers inflation-driven land price hikes.
Peak power demand is projected to rise from 260 GW last year to 270 GW this year, reaching 345 GW by 2030. To meet this growing demand, the government plans to expand nuclear power generation from 8 GW to 15 GW by 2030, with NTPC participating through joint ventures.
A tender for an 1,800 MW gas-based power project is set to be finalised within a month. Meanwhile, coal reserves stand at 51 million tonnes, ensuring a stable supply across the country.
India is also preparing to launch its own carbon market by mid-2026. Under this system, renewable energy users will be able to sell carbon credits, while fossil fuel consumers must purchase them.
Additionally, the country aims to establish 1 lakh electric vehicle (EV) charging stations by 2030. To further strengthen its power infrastructure, the Power Ministry is coordinating with other ministries on a manufacturing mission to address high-voltage direct current (HVDC) transmission challenges.
“If needed, we will invoke Section 11 of the Electricity Act to meet peak power demand,” said Power Secretary Pankaj Agarwal, adding that the Power Ministry and the Central Electricity Regulatory Commission (CERC) are reviewing Grid India’s report on market coupling.
With these measures, India is positioning itself for a more resilient and financially stable power sector, ensuring adequate energy availability as the country moves towards its $5 trillion economy target.
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