Power Ministry’s Planning Led to Highest-Ever Budgetary Allocation: Committee

The parliamentary committee said prompt action is needed to meet smart meters installation target


Allocation in the Union Budget 2023 to the Ministry of Power has increased 29% to over ₹160 billion (~$2 billion), the highest ever for the ministry, the parliamentary Standing Committee on Energy noted.

The committee felt the increased allocation reflected better budgetary planning by the ministry which had convinced the finance ministry to allocate higher funds, the standing committee said in its report on Demand for Grants for 2023-24.

Earlier this year, the Union budget proposed capital investments of ₹350 billion (~$4.3 billion) for green energy transition, net-zero objectives, and energy security.

Further, the report urged the ministry to take prompt remedial action related to installing smart meters to achieve targets without any delays. It noted that only 7 million smart meters have been installed thus far as against the target of 250 million by 2025.

The committee said that the target looked herculean and noted that the ministry has assured that installation will pick up in the coming years as the work related to it is at various stages of the tendering process.

Last year in October, Energy Efficiency Services Limited, as part of its Smart Meter National Program, installed over three million smart meters in Rajasthan, Uttar Pradesh, Haryana, Delhi, Bihar, and Andaman.

The standing committee noted that the Revamped Distribution Sector program envisages the installation of 250 million smart meters at the consumer, DT, and feeder levels by 2025-26. Smart metering projects are envisaged to be implemented in Design, Build, Finance, Operate, and Transfer mode through public-private partnership.

The committee expressed concern that 10 states and union territories had shown widening aggregate technical & commercial (AT&C) losses in the last five years.

In Maharashtra, the AT&C losses, which were 14.4% in 2017-18, jumped to 26.6% in 2020-21. Similarly, with only 4% AT&C losses in 2017-18, Chandigarh recorded 11.9% in 2020-21.

In Nagaland and Jammu & Kashmir, AT&C losses are as high as 60%.

“These figures do not augur well for the aim of the government to contain AT&C losses in the country to the level of 12-15%. The Committee, therefore, desires that the ministry should urgently find out the reasons for the increase in AT&C losses in these states and help the concerned states make customized plans to arrest the deterioration of the condition,” the report said.

The committee also noted the government’s initiative toward developing pump storage projects and battery energy storage systems through viability gap funding (VGF).

It said the estimated capital cost of the VGF program is ₹94 billion (~$1.2 billion) with gross budgetary support of ₹37.6 billion (~$470 million).

The VGF program will bring down the tariff to acceptable levels to the power distribution companies and consumers.

“Due to the advent of variable and intermittent renewable energy into the power system in a big way, the need for pumped storage projects and battery storage is being felt for balancing the demand and supply fluctuations in the grid. The Committee, therefore, welcomes this initiative and believes that this program will also provide the impetus for the growth of the Hydropower Sector (pumped storage projects),” the report said.

On the power demand and supply front, the report noted that the ministry expects a peak of 230 GW during April, 2023. The ministry also apprised the committee of the arrangements, including running gas-based power stations, made to meet the peak demand.

However, the committee expressed its concern about a potential shortage. “The Committee recommends that apart from making ad hoc arrangements to meet the peak demand, there should be comprehensive planning to fully meet the peak as well as the energy demand in the country by optimal utilization of the generation resources.”

The power ministry recently laid out the operational strategy for thermal power plants to meet the peak demand this summer.