MC Exclusive | ‘We will absolutely meet the surge in demand’: Power minister RK Singh

The government is prepared to meet the surge in electricity demand in the coming weeks, RK Singh, Union minister for power and renewable energy, said in an exclusive interview to Moneycontrol.

The minister talked about the impact of high fuel costs on power tariffs and acknowledged the challenges India is likely to face in becoming a global exporter of green hydrogen. He also said that the smart metering initiative is still mired by manufacturing constraints and explained how the government plans to introduce 'energy accounting' in India's power systems. Edited excerpts:

After imported coal blending and increasing gas-based power generation, what challenges are left in meeting the impending surge in power demand?

We are prepared. We expect the demand to touch almost about 230 gigawatts (GW), which will be an all-time record. Up till now, the demand has been only 215 GW, which was also an all-time high. But that was last year. Electricity demand is increasing rapidly, at about 10.5 percent in our country, if we look from last year. The great thing is that this shows our economy is growing.

We have enough capacity; we will absolutely meet the surge in demand. We have made sure that there are sufficient stocks of coal, and we've also tied up the gas capacities to supplement the coal and renewable energy capacities. I have issued directions that all imported coal-based power plants will operate to their full capacity. So, we are well prepared. There is not going to be any issue during peak time.

Will the higher input costs and improved financial prudency lead to an increase in power tariffs across the country?

In Spain, the tariff is €50 per megawatt hour (MWh) – almost ₹50 per unit! The entire developed world went through the crisis of very high power cost, which led to hefty hikes in tariffs. But we didn't let the global increase in input costs affect us. The power cost of our consumers remained levelised. So our prices will remain stable and supplies will also be available to meet growing demand.

In fact, I brought down the price ceiling in the power exchanges. Earlier, the ceiling in the exchanges was Rs 20. So, first I brought it down to Rs 12 per unit last year. Recently, I further brought it down to Rs 10. That's the revised ceiling now. If the cost of generation is, let's say Rs 2.5 per unit, why should you sell for Rs 12 or 20? So, this will ultimately help in keeping power tariffs low even when demand rises in the coming months. So, India’s power tariffs will remain much less than other countries.

Could you give an estimate of how much the tariff could increase on an average nationally?

Power tariff increase will depend on whether coal price increases, which in turn will depend on whether railway freight increases. So, that is outside our control. The distribution costs are mainly salary costs of staff of distribution companies (discoms). So, when salaries go up, that also has a certain impact.

Every state has different tariffs. Every state has a regulator which fixes the tariff. The point that is very important is that this time, the power tariff revision happened on time probably for the first time. It's just the beginning of the financial year and the tariff for 2023-24 is in place in all states, barring two.

Can you give us an overview of the reduction in outstanding dues to generation companies and discoms? Many states subsidise electricity and sell below procurement costs. Can they meet their payment dues on time?

The payment discipline is perfect now, in the sense that not one current bill is outstanding. If any current bill remains outstanding after the due date, the power gets cut off. It is automatic. When it first happened to 12-13 discoms and I got calls from my colleagues, other ministers to intervene. I said, "Sorry, I can't do anything about it."

As far as legacy dues are concerned, you have to pay your instalments. And if you don't pay your instalments, then again you get cut off from power trading. When we started, the legacy dues were about Rs 131,000 crore. Now, it has come down to about Rs 90,000 crore. And the power sector has been turned around. The AT&C (aggregate technical and commercial) losses have reduced by 5 percent in one year.

Can you imagine that subsidy dues are also up to date now? There are no outstanding dues that state governments owe for subsidy to discoms now. The subsidy is based on the number of units consumed by the subsidised category and not just what the state decides. Six months ago, we put in place a system whereby we say that you have to declare the subsidy per unit for different categories. For farmers, if a state government says they will give a subsidy of ₹4 per unit, then the subsidy bill is calculated by multiplying the subsidy per unit into the number of units supplied to the farmer category or to the BPL category, etc. Energy accounts have been made mandatory.

So, you need to congratulate me! (laughs).

Electricity is not free. So, if state governments are offering subsidies they have to pay up. So, they have to make that provision in the budget and if you don't pay for the power which you consume, you will be cut off. It's very simple. This system has brought about discipline in our power sector.

Experts have called for dynamic pricing—power usage in peak hours will be priced differently from normal times. What are your thoughts?

My opinion is yes – that’s why I want the smart prepaid metering on the ground as soon as possible, so that we have a time-of-day tariff. And that will help the consumer. It will help the consumer because during solar hours, they will get much cheaper power.

What is the status of the national smart metering mission?

It is progressing, but there are manufacturing concerns. So, we cannot hasten the mission beyond a certain speed because of the manufacturing constraints.

One target I have set is that by March 2024, all feeder lines and distribution transformers will have to be metered because that is necessary for energy accounting. The days of irresponsibility are over. Every bit of energy is going to be accounted for. Power utilities will have to publish quarterly accounts and annual accounts.

If AT&C losses are happening, they are happening in which division, which circle, who are the executive engineer and superior officer responsible for that loss – all this will have to be accounted for. If I gave you, say, 1,000 MW, but you could supply only 600 MW of it, doing such a level of energy accounting will help utilities identify exactly how and where the 400 MW get pilfered. It will help identify high-loss pockets.

We are modernising the feeder monitoring system through which we keep a check on feeders. It is through such systems that power availability in rural areas has improved. Now rural areas are getting 22 hours of electricity, though I am not happy with that because even those areas should get 24 hours. But earlier, rural areas used to get just 12 hours of power supply.

The electricity network has three pillars – generation, transmission and distribution. Which one do you think still needs lot of work?

I need to add a lot more capacity because we are growing. As far as generation is concerned, I have to specially add a lot more capacity in renewables, round-the-clock power.

In transmission, I am happy. I am going to add more capacity in transmission also, though. I came up with a transmission plan for the 500 GW of renewable energy that is to come up by 2030 in India. In transmission, we are a world leader otherwise. We have connected the whole country to one grid. Now, we are the largest single-integrated grid in the world.

Not only that, we've changed the rules. We brought in ease of doing business. We put in place general network access, which means you get connected to a grid anywhere and you get connected to the entire country.
In other parts of the world, in the developed world, if you're a generator or you want connectivity, if you're a discom, do you know how long it will take? 1-1/2 to 2 years. In our country, it takes only 60 days maximum. We are better than the developed world as far as transmission is concerned.

In distribution, we brought about a huge change. We constructed 2,900-odd new substations, upgraded 3,980 substations, added 8.5 lakh circuit kilometres of HT lines and LT lines. All this was done in less than six years.
We've upgraded the transmission and the distribution lines, but I need more money for further modernisation. I spent the Rs 3 lakh crore that was allotted under the revamped distribution sector scheme. The implementation, the tendering, etc. for the same is happening as we speak. But I need more money because there are still lines, distribution lines, which are more than 20 years old, 25 years old. They need to be changed. I don't want any part of the network, which is more than, let's say, 5-11 years old.

Please give us an overview of India’s electricity generation capacity addition plans.

At least 44,000 MW of thermal capacity is under different stages of construction. In the renewables segment, the government has already announced its plan to install 500 GW by 2030. Besides, 15-16 GW will be nuclear capacity. At present, India's nuclear power capacity is 6,800 MW. In hydropower, the country currently has 46,000 MW installed and another 14,000 MW is under construction. The government will be starting construction for another 16,000 MW of hydropower projects soon.

The share of hydro is 11 percent and projects are delayed for years. What can be done to ramp-up these capacities? Also, you’ve talked about a large hydro power company merging small hydro PSUs. What is the thinking behind this?

We have multiple hydro companies and we are thinking of merging them into one. So that is the thinking at the national level.

Talking of project delays, we've tackled it. All those projects which were delayed are now progressing. In hydro, you will have geological surprises. So you dig and suddenly you come across a void, etc., which you have not foreseen. Now, that means that your estimates have to be updated, and decisions have to be taken. But officers were hesitant to take decisions. They were scared of CVC (Central Vigilance Commission), CBI (Central Bureau of Investigation) and so on. But I assured them that I am with you. For me, every officer is honest, unless proved otherwise. That is one.

The second is… a system of independent engineers, so that independent engineer is an external element. So he helps in that decision making. He will certify that this extra work is required. I have put this in place now.
Then, I have also put in place a system of dispute resolution mechanisms. We have dispute resolution committees now of mostly retired secretaries. So, if there is any dispute, before you go to arbitration, you come to this committee, and a decision is taken in about 30 days flat. So the pace of my construction has gone up tremendously. And we are adding capacity.

The draft note for incentives on green hydrogen production and manufacturing electrolysers is out. What incentive trajectories are planned for various industries?

We plan to have 5 million tonnes of manufacturing capacity in green hydrogen installed by 2030, and I am quite sure that we will achieve it.
How will that happen? It's all in the private sector. We have put in place a huge ecosystem in the renewable energy sector, which is what gives us an advantage… We can set up 1 MW of solar capacity at $600,000. This is the cheapest anywhere. So, we will give the cheapest green hydrogen, which is a huge opportunity for export.

The world recognises it, and that's why some people have started putting up barriers. These countries have started using protectionist measures to capture the market. They will put up non-trade barriers, which has already started.

One country has come out with a huge protectionist measure, they call it the Inflation Reduction Act. The cost of production of green hydrogen in our country is $2.5. They are giving a subsidy of $3! Another country came out with another protectionist measure, saying the distance between the electrolyser and the renewable energy source should not be more than 500 kilometres.

How does India intend to counter such measures taken by the developed countries?

We are saying let there be free trade, let countries compete. It has to be an open market. I have asked the ministry to see whether we can go to the World Trade Organization. The problem is that some countries have vetoed all appointments to the adjudication mechanism of the WTO. So you don't have an adjudicating body. So what do you do with the WTO? That is also a problem.

One thing is clear – they can't lecture us so far as energy transition is concerned because we are transitioning faster than them. Our actions for energy transition are unparalleled. We are the only major economy which is ensuring that the rise in global temperature is below 2 degrees. And whatever we have placed in NDCs (nationally determined contributions), we have achieved. What we said we will achieve by 2030, we achieved in 2021.
Also, only the transitioning of the developed nations won't help. They will have to help the developing countries. We don't need help, thank you! We're getting enough investment. But the developing countries in Africa need assistance, they need finance, they need technology. They (developed nations) pledged to give that, but nothing has happened so far.

Questions like what is being done to make more batteries for storage and progress in carbon capture, utilisation and storage, which is just at the pilot stage across the world now, need to be answered.

The government has given a push to storage technologies in the Union Budget to enable solar power capacities to be used during evening peak hours. What is the storage capacity base the government is targeting?

The government has announced that we will put up 4 GW of storage with viability gap funding (VGF). We have concluded one bid for 4000 MWh of storage, one of the largest bids in the world. And we will come up with more bids because we want more round-the-clock renewable energy.
The cost discovered in the last bid was ₹10 per kilowatt hour. Let's see what happens in the next bid.

When will solar manufacturing pick up in India? Also, give us an update on the latest plans to promote wind energy.

Things will pick up very fast in the solar sector. As for wind, we are going to come out with bids very soon and I am personally pushing it.