The Budget for FY21 has a clutch of welcome initiatives for the policy-challenged power sector to boost investment, stem revenue leakage, rev up thermal efficiency and better leverage solar energy.
But to translate policy intent into better performance would require the political executive to walk the talk on reforms, and not fall back on populism. The move to replace existing meters with prepaid smart meters nationally can be transformative indeed for the lacklustre finances of power distribution companies (discoms), hitherto characterised by rising non-payment and routine theft of power conveniently labelled as increased technical and commercial losses.
Digital metering can, in theory, enable multiple suppliers to compete for custom in terms of power quality and price at the retail level, improving efficiency in the market for power.
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But, concurrently, we also need transparency in state power utility finances and mandatory norms such as quarterly publication of discoms’ accounts. The reduced 15% tax on offer for new power generation companies can both raise investments and improve thermal efficiency levels.
The way forward is to dismantle old, inefficient power plants and replace them with new capacity that incorporate ultra super-critical and advanced ultra super-critical boiler technologies, which raise thermal efficiency by about 50%. It means gainfully reducing carbon emissions by 50%, and minimal increase in fuel usage going forward.
The proposal for 20 lakh solar pumps is welcome: it would replace subsidised power from the grid and enable metering with reduced political acrimony.