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Draft Indian National electricity policy 2021

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vyom shah's picture
Assistant Manager, Torrent Power Limited

A power sector professional with experience in regulatory affairs of entire value chain of conventional generation, transmission and distribution and a renewable energy enthusiast.

  • Member since 2021
  • 1 items added with 720 views
  • Jun 2, 2021


·       Generation: Clean and sustainable

·       Transmission: Adequacy and efficiency

·       Distribution: Revitalization and supply of quality power

·       Trading: Efficient markets

·       Regulation Requirement: Light touch

·       Make in India & Atmanirbhar Bharat Abhiyan: Manufacturing of goods and services in power sector value chain in India


·       Pumped storage hydro power plants, open cycle gas power plants/ gas engines, new and viable forms of energy storage technologies to be encouraged.

·       Differential tariffs for peak and off-peak hours for consumers and generating stations to be introduced expeditiously.

·       Regulatory framework for determination of adequate primary, secondary and tertiary reserves.

·       Coal based plants to operate at reduced generation levels to provide flexibility to cope with variable generation from RE sources.

·       Use of imported coal in power stations to be minimized to avoid losing huge amount of foreign exchange.

·       Possibility of using the existing combined cycle gas based power plants to be explored. Supply of gas to power plants to be made flexible with respect to time, depending on requirements, instead of constant flow.

·       Gas stations to be compensated for reduction in efficiency and increased wear and tear due to fluctuations in generation.

·       Development of model contract document for award of work in hydro projects to facilitate faster resolution of disputes with contractors.

·       Task of creation of land bank/ forest bank to be speeded up by state government. (Rationale: It shall help to reduce delay in identification of land for compulsory afforestation and hence faster clearances.)

·       Need for tools like SBD for Hydro Power in long and medium term.

·       All future procurement of power from RE sources except Waste to Energy to be through TBCB.

·       Large Hydro Power Stations shall be exempted from TBCB subject to conditions laid down in the Tariff Policy.

·       Two-part tariff mechanism option to be evaluated for RE sources like wind and solar (Rationale: Until now these RE projects had energy only tariffs and paid only when energy is drawn by distribution companies.)Two-part tariff mechanism particularly in case of medium term/ long term procurement with hybrid generation of RE source with conventional generation.

·       MOP may notify a trajectory for HPO for a period up to 2029-30 and may extend it further if required.

·       Need to remove the short coming of existing RPO-REC system and supplementing it with market based options so as to cap investor’s price risk while ensuring some exposure to basic market risks of forecasting, scheduling and balancing.

R&M in Generation:

·       R&M of thermal power plants for better efficiency and environmental compliance. PAT scheme to incentivize efficiency improvements for TPPs.

·       In Hydro plants, civil works have useful life of 100 years and electro-mechanical works have useful life of 40 years. Cost of EM works is 20-30% of new HEP. Hence, R&M may be done in EM works to increase the life of HEP by another 40 years. It would also obviate the need for obtaining statutory clearances.

·       Repowering of wind turbines shall increase efficiency and CUF.


·       Prior agreement between buyers and sellers of electricity should not be pre-condition for network expansion.

·       System for fair compensation should be developed either through back-to-back standard agreements or through suitable regulations to facilitate matching completions of two or more transmission systems and/or generating stations.

·       Economic signal in the form of variable cost of generators, congestion, transmission losses and incremental investment in transmission shall be considered for achieving optimal transmission capacity addition.

·       Transmission projects to be of 2 categories:

(1) The generator or drawing customer specific projects which will cater to the needs of generator or drawing customer, or

(2) system strengthening projects which could be required for transferring power from areas where the availability or generation is high or growing, to areas where demand is high or growing and the supply is constrained or in the process of getting constrained.

·       Need of streamlining of process to grant approval of transmission projects before any investment has been made.

·       Transmission projects approved by the government may be executed under section 62 or section 63 of the act.

·       CERC to implement a transmission tariff sharing mechanism sensitive to distance, direction and quantum of flow.

·       Consistency to be maintained in transmission tariff sharing mechanism in ISTS and InSTS.

·       Considering the difficulty in obtaining ROW, upgradation of existing AC transmission lines to higher voltage AC lines with multi voltage/ multi circuits and uprating by use of High Temperature Low Sag conductors to enhance power flow per meter of ROW and to reduce losses.


·       Public Private Partnership in distribution sector is one of the ways to improve efficiency, enhance consumer satisfaction and reduce financial losses of distribution company.

·       Like franchisee, another variant of PPP in distribution sector can be distribution sub-licensee.

·       An element of competition can also be brought in by segregation of carriage and content business.

·       Regulatory commissions to ensure that all reasonable and legitimate costs are accounted for in tariff without taking recourse to regulatory assets. Truing-up exercise to be done at the earliest to ensure that unnecessary carrying costs do not inflate tariffs.

·       Distribution System Operator for real time operation of distribution system needs to be introduced. (Rationale: SCADA along with DSO would help in management of load, improvement in quality, detection of theft and tampering, customer information and also prompt and correct billing and collection.)

·       DSO would play a major role in dealing with distributed energy resources to ensure grid security and reliable supply to consumers.

·       DSO to be made a separate and independent entity if segregation of carriage and content takes place.

·       All SERCs to adopt FOR’s model smart grid regulations or come up with their own regulations on basis of FOR’s model.

·       SERCs to strictly enforce MOP’s electricity (Rights of Consumers) Rules 2020.

·       Distribution Licensees to prepare power portfolio management policy and get it approved by the state commission.

·       All new connections should be released with smart pre-paid meters/ simple pre-paid meters.

·       Existing meters should be replace by pre-paid meters in a phased manner so as to achieve 100% pre-paid metering within 3 years from the issuance of this policy.

·       SERCs to notify incentives for demand response. Consumers should be given a choice to offer their part or full load for interruption in case of exigencies in the grid in lieu of a lower tariff. Such consumers must have smart meters.

·       Efforts to be made by all DISCOMS to complete the metering of distribution transformers within next 3 years time.

·       If the state government desires to grant subsidy to any consumer or class of consumers in the tariff determined by SERC, then the same shall be in the form of DBT.

Micro grids:

·       Strengthening of micro grids to enhance reliability of supply and wherever feasible, these should be integrated with main grid.

·       SERCs/ JERCs to make enabling provisions to promote micro grids.

Power Markets:

·       Share of spot markets to be increased to about 25% during the year 2023-24. (Rationale: Need to do away with the present long term PPA driven arrangements while catering to the need for reliable capacity.)

·       Introduction of longer duration forward contracts and derivatives on the power exchange.

·       A new entity called aggregators may be created to aggregate demand, RE generation, demand response, micro-storage, etc. to small consumers, prosumers and producers to reach the market. (Rationale: This would help in promotion of open access which is presently allowed for consumers with load of only 1 MW and above).

Regulatory process:

·       Regulations framed by appropriate commission should be aligned to the guidelines or SBDs.

Environmental Issue:

·       GIS instead of conventional sub-stations. (Rationale:It requires 30% less land.)

·       Thermal power plants located within 50 km radius of sewage treatment plant shall mandatorily use treated sewage water produced by these bodies and the associated costs shall be pass through in tariff.

·       Air cooled condensers to be used instead of water cooled condensers for future coal based power plants.

·       Solar PV plants should use robotic dry cleaning instead of water cleaning based on cost-benefit analysis.

·       Enhance gainful utilization of fly ash in coal based thermal power plants as per MOEFCC norms.

·       Cost incurred for SOx, NOx, Mercury & water consumption compliance as per MOEFCC norms shall be considered for tariff determination under section 62 of EA, & in case of TBCB under section 63 of EA it shall be allowed under “change in law” provision.

·       Centre/ State to formulate a policy for disposal of electronic waste.

EV charging infrastructure:

·       Time of day tariff to avoid charging during peak load hours.

·       SERC to fix the tariff and set rules for EV to inject power back into the grid.

·       DL to be proactive in identifying parts of network which require strengthening for EV charging. SERC to come up with a provision to grant early approval for augmentation proposed by DL to facilitate EV charging.

Rao Konidena's picture
Rao Konidena on Jun 2, 2021

Thank you for flagging this for us.

Does India allow competitive/private transmission developers? If so, how does that tendering process work?

Would you say the current central government is favoring utility scale renewable generation or distributed generation?


vyom shah's picture
Thank vyom for the Post!
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