National Electricity Policy 2021 UPSC Current Affairs Topics

National Electricity Policy 2021

The draft National Electricity Policy (NEP), 2021 which, under the Electricity Act, 2003 is a guiding policy for planning power generation, supply and investment, has emphasised on increasing private participation, especially in power distribution. Key features of National Electricity Policy 2021 are the following :

● The NEP has introduced power quality, micro grids, pump hydro storage, real time power markets.

● Draft NEP says, “This sector is marred with many inefficiencies like high AT&C losses, inadequate system planning, poor upkeep and maintenance of equipment etc. which are affecting the financial health of the discoms, and leading poor consumer satisfaction.”

● NEP has noted that despite the Central government connecting 100 per cent households in the country with the national power supply grid, quality of power and duration remains an issue.

● There is a need to strengthen the distribution system to ensure 24x7 power supply.

● Evolve a unified scheme for development of adequate distribution infrastructure wherein central assistance is linked to reform milestones of the states.

● The Union Budget 2021 announced a revamped reform scheme for discoms, entailing Rs. 3·05 trillion expenditure. The scheme would put the onus on the states to formulate their own action plans and funds would be disbursed accordingly.

● Public private partnership in electricity distribution is one of the effective ways to improve efficiency, enhance consumer satisfaction and reduce financial losses of the discoms.

● Franchisee model being one of the PPP models has emerged as a preferred route for introduction of privatisation in the distribution sector. Another variant of the PPP model could be in the form of a sub-licensee power distributor for a particular area.

● While India is committed to add more capacity through non-fossil sources of generation, coal based generation capacity may still be required to be added in the country, as it continues to be the cheapest source of generation,
though compliance to stricter environment norms remains a challenge, particularly for older stations.

● The draft has been floated in a public forum by the ministry of power on April 28, 2021 for getting comments from stakeholders.

● The NEP has introduced several new concepts starting from the need of micro grids in remote areas to having a real time power market and need for investment in pump hydro generation.

● With the rising capacity of renewable energy generation and lack of balancing sources of energy such as gas and large hydro, the NEP has batted for realising the potential of pump hydro storage. The NEP noted that the country has a potential of 96,524 MW of pump hydro storage and of that barely 4,785 MW has been out up.

● For utilising power generation at the source end and reducing power supply wastage, the NEP has suggested that power distribution companies (discoms)
should explore the possibility of micro grids, especially in areas prone to natural disasters. These micro grids should preferably be powered with renewable sources of energy.

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