There is Lot of Scope for Energy Reforms in Karnataka: Jagadish Shettar

There is a lot of scope for energy reforms in the state and we are looking into the needs of industries, said Jagadish Shettar, Minister for Large and Medium Scale Industries, Govt. of Karnataka.

December 30, 2020. By Manu Tayal

There is a lot of scope for energy reforms in the state and we are looking into the needs of industries, said Jagadish Shettar, Minister for Large and Medium Scale Industries, Govt. of Karnataka.

The Minister further told that “we are closely working with ESCOs, identifying the pressure pointes such as cross subsidy, additional surcharge, billing charges etc which are being evaluated under Open Access power source.”

In the coming days we would bring out energy reforms in the state which would be beneficial to the industries, Shettar added.

He was speaking during a webinar organized by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) in association with the Indian Energy Exchange (IEX) on the topic ‘Procurement of Cheaper Electricity for Industries through Open Access in the State of Karnataka’.

The Minister also highlighted that “Today, we have emerged as a hub of high-tech manufacturing across all the sectors be it aerospace, electronics or electric vehicles. Recently, the new industrial policy 2020-25 was released with an objective of promoting industries in tier 2 and 3 cities with special focus to enhance ease of doing business. Karnataka has a strong industrial base. Karnataka being a power surplus state sees growing demand from power from sectors such as EV, datacenters etc.”

On the other hand, Gaurav Gupta, Principal Secretary, Department of Commerce and Industry, Government of Karnataka said, “I would like to point to out the crucial role played by electrical power in the cost of industrial production. We need to see that the electrical power as a cost of production should reduce in the state. There should be cheaper electricity made available to the industries.”

“Over the years India has become a power surplus country which has changed the demand-supply balance and now there is ample electricity supply available. Owing to this, bulk consumers have multiple cost-effective options available to help them become more competitive. Globally as well as in India, power exchanges have gained acceptance as most preferred option for buying power in a competitive and flexible way. Confronted with COVID-19 hardships, several distribution utilities and the C&I consumers have leveraged low price power on the Exchange to accrue financial savings. The commercial & industrial consumers in Karnataka can also benefit from open access through Power Exchange to procure competitively priced electricity as they seek growth and revival. IEX pioneered operationalization of open access way back in 2008 and today more than 4500 commercial and industrial consumers all over India are part of the Exchange’s eco-system. Through the newly introduced real time market, power can be bought just one hour ahead & the green market is also available to trade in green energy as per requirement,” said Rohit Bajaj, Head-Business Development & Sr. Vice President, Indian Energy Exchange.

On the prices of procuring electricity, Uma S Nair, Regional Director, ASSOCHAM said, “Karnataka is amongst the leading industrial states in the country with heavy engineering, automobile, agriculture, aerospace, textile and garment, biotech, and IT is contributing significant share in the State GDP. With the rolling out of its new industrial policy, the state government is aiming to boost its industrial growth while attracting investments worth at least Rs 5 lakh crore. As Karnataka takes steps to advance this growth and development led vision post COVID-19, facilitating Open Access could help the industry procure electricity at competitive and attractive prices, thereby, reducing their cost of operations while contributing to overall growth, development and job creation in the State.”

“Open Access was envisaged as a key reform in the Electricity Act 2003 for introducing competition in electricity industry at the retail level. Cheaper power through Open Access can contribute significantly in improving attractiveness of Karnataka vis-à-vis other industrialized states in the country, for getting new investments,” commented Amitabh Saha, Director, Deloitte Touche Tohmatsu India.

Meanwhile, in the Electricity Act 2003 consumers with connected load of 1 MW and above were allowed to procure electricity through open access. This option allows sourcing of competitively priced electricity and power directly from power generators, traders, or through the power exchanges. In FY 2020, the Open access volume share of industries in Karnataka stood at 13 per cent and is likely to increase with further reforms in easing power procurement through open access.

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