National Electricity Policy: Crux of PRS Report

Recently, the Standing Committee on Energy gave its report on the Review of the National Electricity Policy 2005. The standing committee on Energy has highlighted the point that for increasing new generation capacities, appropriate technology may be considered.

National Electricity Policy: Crux of PRS Report
National Electricity Policy: Crux of PRS Report

Recently, the Standing Committee on Energy gave its report on the Review of the National Electricity Policy 2005. The standing committee on Energy has highlighted the point that for increasing new generation capacities, appropriate technology may be considered. Based on the findings of the committee, the PRS has released a detailed report. For the benefit of UPSC Civil Services Exam aspirants, we are providing important points of it.

1. Utilization of power plants

The report has showed that the hydro electricity’s current installed capacity is 44,478 MW. It is just 30% of the potential which is 1,48, 701 MW. From fiscal year 2010 to fiscal year 2017, the overall installed capacity of power has increased.
But running of power plants at lower plant load factor—it has fallen from 77.1% in FY10 to 59.9% in FY17. It will also escalate the generation cost of power in the country. This means the efficiency of utilization of power plants has decreased.
The new electricity policy has recommended that the government should make necessary provisions to increase the utilization of power plants.

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2. Balance in growth

The report has pointed the fact that the substantive fall in solar tariff and its very low gestation period is posing a threat to economic viability of thermal power plants. It observed that solar power is doing the same to thermal power what thermal power did to hydro power.
The solar energy is witnessing growth which is a good sign for the country. Thermal power has been the mainstay of power sector and due to various reasons. And it’s significance is not going to end anytime soon. Therefore, the growth of thermal sector should be taken ahead in more balanced manner wherein various sectors of electricity complement one another. The poor financial health of power distribution companies continues to be a big concern as their total outstanding debt in FY15 was over Rs 4 lakh crore.
The government launched the Ujwal Discom Assurance Yojana for the sustainable financial and operational turnaround of discoms. This is now expected to improve the situation.

3. Access to Electricity

In present times the electricity is a necessity like air and water. So it is the necessity of the all people of India. The policy has made an objective of the power sector that it will supply electricity to all areas, including rural areas.

The policy has noted that a village with 10% electrified houses is assumed to be electrified, as per the definition of an electrified village. The data show that, currently, 99.4% villages are electrified, but more than four Crore households in the country still do not have an electricity connection. The new policy recommends that the definition of village electrification should be altered and a village can only be declared electrified only when all the households of the village are electrified.

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4. Electricity distribution

The distribution of energy is equally important to the generation of electricity.   The new policy noted that that the economic health of the whole electricity sector depends on the distribution sector, which is currently the most financially distressed in the country.

The aggregate technical and commercial losses (AT&C) in the country are still high. These loses are the major reason behind the distressed condition of the distribution companies ( discoms).

The Committee who formulated the new electricity policy pointed out that the concept of AT&C losses is flawed. This concept disguises commercial losses which unlike technical losses can be eliminated completely.  It recommended that these commercial losses and technical loses should  be segregated.

5. Financial health of discoms

The policy figured out that the total debt of the discoms was around Rs 4 lakh crore in 2014-15.  The Ujjwal Discom Assurance Yojana (UDAY), launched in 2015, seeks to achieve the financial turnaround of these discoms.

It was observed by the Committee that in past too similar interventions had met with failures due to certain reasons. It recommended that necessary arrangement and changes should be made in the scheme. And, more accuracy and correctness should be brought in while implementation.

6. Environmental Issues

The policy has involved environmental concerns in its draft and they would be suitably addressed through appropriate advance action by way of comprehensive Environmental Impact Assessment and implementation of Environment Action Plan (EAP).

The policy has observed that steps would be taken for coordinating the efforts for streamlining the procedures in regard to grant of environmental clearances including setting up of ‘Land Bank’ and ‘Forest Bank’.

Still it is expected that coal plants will fuel 67 percent of India’s power generation. So, the sustainable and pollution free management is necessary of these plans. The new coal washeries would be set up and suitable steps would also be taken so that utilization of fly ash is ensured as per environmental guidelines.

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7. Energy Conservation

The draft of new electric policy has acknowledged that India’s oil consumption has grown 63% from 2005 to 2016 whereas refining capacity has grown only 15%. The gas consumption has increased 38% while production has fallen since 2012.

These facts hint that there is vital need of conserving the energy as the consumption increasing year by year. In order to minimize the overall requirement, the policy has accorded energy conservation and demand side management (DSM).

Apart from it, the Energy Conservation Act has been enacted and the Bureau of Energy Efficiency has been setup.


The new electric policy has included most of the issues which have been hampering the overall electricity pertaining problems. But there are still some of the issues and measure left which should be covered in the new policy.

The drafting committees is required  to examine the paradigm shifts occurring in storage and electric vehicles to promote new technologies in renewable energy, such as smart homes, battery storage ,smart grids, and concentrated solar heat and power.

And there is an important question which needs to be considered. This is why has India missed the revolutions in these technologies? Apart from it, India has also lagged behind in many opportunities in the manufacturing of electric equipments.  So the government should think about, new institutions, organizations and funding mechanisms which can cover up whatever is left in the policy.

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