Renewable energy is expensive : Industry

The cost of renewable energy is cushioned by indirect subsidies such as waivers of transmission charge of around Rs 1.5-2 per unit. Further, dedicated transmission lines for renewable plants are utilised only around 20% due to the intermittent nature of power generation from such sources, raising its real cost.

December 12, 2019. By Ashish Wagh

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Rising penetration of renewable energy will start to pinch state-owned power distribution companies (discoms) as its share in the energy basket has crossed 12%, power industry leaders said in a recent panel discussion.

While trying to find the true cost of renewable energy-based power, they noted that real tariff of solar and wind power plants largely gets hidden by the current indirect subsidies provided by the exchequer. The share of electricity generated by renewable energy sources was 9.2% in FY19, up from 7.8% and 6.6% in FY18 and FY17, respectively.

Anil Sardana, MD of Adani Transmission, Vipul Tuli, MD of Sembcorp Energy, Rajiv Ranjan Mishra, MD of CLP India, and Vineet Mittal, Chairman of Avaada Energy, participated in the discussion organised by Axis Capital recently.

Currently, the cost of renewable energy is cushioned by indirect subsidies such as waivers of transmission charge of around Rs 1.5-2 per unit, the speakers said. Further, dedicated transmission lines for renewable plants are utilised only around 20% due to the intermittent nature of power generation from such sources, raising its real cost.

However, one of the speakers pointed out that even thermal power gets indirect subsidy (of around Rs 1,300 crore to Rs 1,400 crore per GW) as they receive coal at subsidised or non-market-linked price. While lauding the proposed new tariff policy and the amendments to the Electricity Act, the speakers said these developments are “too good to be true”, and some of them may not be implemented.

The Union power ministry has recommended major reforms such as the separation of ‘carriage and content’, penalty for power cuts, setting up of a national power committee and raising penalties for power theft in its proposed amendments to the Electricity Act, 2003.

The industry leaders said the private sector will not put up any more capital for new thermal projects given the number of challenges and difficulty in getting financing or insurance.

 

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