A Month in Review...
There have been two key developments (both on the policy front) this month:
Coal cess: The government of India has proposed to waive the coal cess otherwise known as the clean energy cess of INR 400/ton. It stems from the need to support the power industry’s growing debts by exempting them from the cess. Additionally, the intention of the proposal is to provide leeway to install air pollution control equipment. The push to take the proposal forward came from the Federation of Indian Mineral Industries (FIMI) sighting the need for the government to ensure longevity of coal power plants. However, critics of this proposal argue that without the tax, coal has the potential to become cost competitive with renewable energy eventually stalling RE growth as it would encourage coal to continue to be primary power source in the country.
Round-the-clock power supply: On 2nd January, the Ministry of New and Renewable Energy released a draft scheme for supply of round-the-clock (RTC) power from renewable and thermal power projects. The draft scheme makes the case for “reverse bundling” wherein cheap renewable power can be bundled with more expensive thermal power. This is intended to make sure that there is continuous supply of electricity even during hours that renewables are not available. Thus would make it, both cost effective and reliable for utilities. The draft scheme suggests a minimum of 51% of the annual energy to be supplied by renewable power with or without storage.
The scheme aims to ramp up renewable energy capacity additions as well as fulfillment of DISCOMs’ Renewable Purchase Obligation (RPO). The response to this has largely been pessimistic as RE developers perceive this to be an effort to push thermal energy in an era where it should phased out.