Inter-State Sale of Renewable Power Should be Facilitated : NITI Aayog

The lack of credit facilities in obtaining required finances for energy saving projects are strong deterrents to investments in energy efficiency in India, noted the report


The National Institute of Transforming India (NITI) Aayog has released a report called “Strategy for New India @75” to accelerate growth of the Indian economy. In the document, NITI Aayog talks about the afflictions of India’s renewable energy sector and the path ahead. The document has been prepared after extensive consultations with over 800 stakeholders.

High energy costs result in reneging on old power purchase agreements (PPAs) and erode their sanctity. This leads to uncertainty regarding power offtake and consequently endangers further investments, the report noted. NITI Aayog also believes that flexibility in generation and balance requirements for the integration of renewable energy are emerging as major issues in the country.

Enumerating the problems faced in energy efficiency, the NITI Aayog report stated, “Limited technical capabilities, high initial capital expenditure, limited market and policy issues have adversely affected efforts to achieve energy efficiency.”

The report also mentions that high transaction costs (which involves appointing suitable consultants and vendors for execution) relative to project size, especially in the micro, small-scale and medium enterprises (MSME) sector, make energy efficiency investments unattractive for investors. The non-availability of sufficient credit facilities and difficulties in obtaining required finances for energy saving projects are strong deterrents to investments in energy efficiency in India.

For the renewable energy sector, the NITI Aayog suggests providing a mechanism for cost-effective power grid balancing (gas-based, hydro or storage). Renewable purchase obligations (RPO) should be strictly enforced and inter-state sale of renewable energy should be facilitated, according to the NITI Aayog.

It is necessary to have national level markets and regulations for balancing of power. Central level agencies like Central Electricity Regulatory Commission (CERC) or National Load Dispatch Centre (NLDC) should socialize the costs of balancing interstate transmission systems (ISTS) connected power projects, over the entire system, on the lines of the point of connection (PoC) or a similar mechanism.

NITI Aayog also advocated that decentralized renewable energy in rural areas in conjunction with the distribution companies’ (DISCOMs) grid can offer reliability, hybrid renewable energy systems such as solar PV + biomass should be explored, and commercial biogas needs to be promoted by providing subsidy to consumers.

Regarding energy efficiency, the NITI Aayog has advised Bureau of Energy Efficiency (BEE) to come out with a white paper on its five-year strategy on energy efficiency in various sectors and specify energy consumption norms, develop cluster-specific programs for energy intensive industries to introduce energy efficient technologies for MSME sector.

NITI Aayog believes that state designated agencies (SDAs) need to be more empowered and provided with adequate resources to implement energy efficiency related programs. There is a need to ensure greater participation of energy service companies (ESCOs) using appropriate financing models with a risk sharing mechanism, particularly by public sector banks. States should adopt the second version of the Energy Conservation Building Code (ECBC) in their building by-laws and ensure faster implementation.

NITI Aayog has also advocated promoting the mandatory use of LED and the replacement of old appliances in government buildings with five-star appliances. The Aayog has advised to focus the UJALA program on lower-income households and small commercial establishments and to increase the number of appliances covered under the Standards and Labelling (S&L) program.

NITI Aayog has asked to widen and deepen the perform, achieve and trade (PAT) program; make Energy Saving Certificate (ESCert) trading under the PAT program effective by ensuring strict penalties against defaulters and to promote the use of the public transport system as public transport systems will be converted to electric in a time bound manner and to expand the corporate average fuel efficiency standards (CAFE) beyond passenger cars to other vehicle segments.

Recently, the NITI Aayog issued a working paper stating that solar penetration in India is highly cost sensitive. In September 2018, NITI Aayog issued a draft concession agreement for public private partnership (PPP) for operation and maintenance of electric buses in Indian cities.

Saumy Prateek Saumy is a senior staff reporter with covering business and energy news since 2016. Prior to Mercom, Saumy was a copy editor at Thomson Reuters. Saumy earned his Bachelors Degree in Journalism & Mass Communication from the Manipal Institute of Communication at Manipal University. More articles from Saumy Prateek.