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The Haryana Electricity Regulatory Commission invited comments for finalization of the Draft Haryana Electricity Regulatory Commission (Prepaid Smart Metering) Regulations, 2021. A few key recommendations provided by Prayas include foremostly the need to consolidate all metering related provisions and regulations in one metering regulations or the SoP. Our submission has also highlighted the need for addressing consumer concerns for application process, grievance redressal and data privacy. We have also suggested finer changes to the draft regulations in order to facilitate easier transition to smart meters for all consumers.

Some studies have suggested that early retirement of coal-based generation is a solution to address some concerns in the power sector. According to these studies, age-based retirement of power plants will result in cost and efficiency savings, which accrue from replacing older generation with newer options that are expected to be more efficient and due to circumvented expenses on pollution control equipment. This paper analyses the claimed benefits of such action and compares it against the attendant risks.

It concludes that the estimated savings from such early retirement are not very high. The argument of unviability of installation of pollution control equipment to meet environmental norms also does not apply uniformly to all old plants.

Along with this, these potential savings from early retirement must be weighed against the benefits of the older plants’ capacity value and ability to provide ancillary services. The risks of retiring older capacity aggressively should also be considered, as it may give impetus to fresh coal-based capacity addition. Besides, given economic, operational, and environmental drivers, the older capacity is likely to fade away naturally over the next decade. The amount of coal-based capacity in the pipeline, predominantly from central and state generators is a bigger cause of concern. These possible excessive capacity additions, from pipeline capacity and aggressive early retirement, could result in surplus capacity, resource lock-ins, and stranded investments. Thus, the emphasis on early retirement appears misplaced.

Any decisions regarding capacity additions or retirement must be backed by rigorous modelling-based analysis and consideration of intersectional impacts. In particular, a simplistic age-based criterion for early retirement may prove counter-productive.

An article capturing these highlights was carried in The Hindu on 9th August 2021, and in India Together on 31st August 2021.

The CERC issued a suo-motu draft order on a comepensation mechanism for competitively bid TPPs on account of change in law for compliance with the revised emission standards notified by the MoEFCC. Taking such suo-motu action is essential toward providing regulatory certainty to Section 63 projects on account of change in law due to the revised emission standards, and streamlining their compliance to the same.

Prayas (Energy Group) submitted comments toward ensuring clarity of process, accountability, and effective implementation of the proposed mechanism. This included:

  1. Strenghtening the provision regarding availability linked recovery of supplementary capacity charges, by providing clarity on the process to report and validate the availability of ECS
  2. Ensuring that the computation of additional auxiliary energy consumption due to ECS is linked to the availability of the ECS
  3. Disallowing the penalties on account of non-compliance to Environment (Protection) Amendment Rules, 2021
  4. Extending the dissallowance of cost pass through on account of prolonged shut down period to Section 62 projects
  5. Ensuring that there are measures in place to prevent regulatory delays and ensure prudence
  6. Providing clarity on terminologies used and accounting for alternate methods to meet the revised environmental norms

Recent times have seen a considerable discourse around whether India should announce a net-zero target, and by when. In this op ed, published in The Hindu on 21 Apr, 2021, we state that India’s best approach would be to adopt a sector-led strategy and undertake ambitious, concrete steps in those sectors. We illustrate this by giving some examples from the electricity sector. On the electricity supply side, the concrete steps include capping coal-based generation capacity, initiating measures for a just transition away from coal, and addressing the current challenges of the electricity distribution sector. On the electricity demand side, the suggested measures include adopting ambitious sales targets for the most efficient bracket of fans, ACs and refrigerators. In addition, India should use this opportunity to become an important player in the global clean energy supply chain.

Adopting such concrete and credible near-term measures will empower India to hold the developed world accountable to similar concrete actions rather than distant net-zero promises. Moreover, it will enable India to nimbly adapt its climate strategy and climate pledges as technologies mature and become available. This will also help India to make informed and realistic choices about pathways to eventually reach net-zero emissions.

Clean and affordable cooking is both a crucial public health and energy equity issue. Given the policy and investment push, Liquefied Petroleum Gas (LPG) has been and will continue to be a major part of the solution in India. The Pradhan Mantri Ujjwala Yojana (PMUY) has ensured near 100% connection penetration of LPG in the country today. PMUY continues to be one of the major social protection schemes, as was seen even during the COVID-19 crisis, where three free cylinders to PMUY beneficiaries were provided. Recently in the budget speech, the Finance minister announced that PMUY would be expanded to a further 1 Crore people. All of these suggest that PMUY, and indeed LPG, is here to stay and would be one of the prominent public instruments to ensure rural transition to clean cooking fuels; while an urban transition to piped natural gas and electric induction cooking is currently underway in parallel.

Connections notwithstanding, there are considerable gaps when it comes to sustained adoption of LPG as a clean cooking fuel. The latest pan-India data available from NSSO's 76th round survey on Drinking Water Sanitation Hygiene and Housing Conditions and the 5th National Family Health Survey (NFHS) paint a grim picture. Even few years into PMUY, about half of rural India still relies on solid fuels for its primary cooking needs. While affordability, behaviour change, local tastes, cultural habits etc. are indubitably some of the drivers for translation of connections to sustainable use of LPG, quality of supply and service (QoSS) and all the factors that ensure QoSS are also crucial to this story.

If the public health and social development goals and the huge investments made in PMUY and expanding distributorship networks have to be fully realised, we need to focus on both policy and governance issues in ensuring sustained use of LPG, especially in the rural and underserved areas. To discuss some of these issues, Prayas (Energy Group) organised a roundtable discussion by bringing various stakeholders together. The roundtable discussion was dedicated to the memory of  Kirk R. Smith who worked tirelessly to understand and address the challenge of indoor air pollution arising from use of solid cooking fuels in India and around the world.

Prayas (Energy Group) and Centre for Policy Research organised the second roundtable on “Managing a fair transition away from coal in India’, on 20th & 21st  January, 2021. This event followed the first iteration of the roundtable, held in December 2019, which served as a conversation starter on the transition away from coal that is already underway in the country. The transition discourse has since further evolved, with key analyses from several research groups and important policy notifications from central and state governments.

The second roundtable was convened with the agenda of discussing the emerging analyses and possible avenues of managing the transition in a timely and just manner. The two-day online event was split into moderated sessions to facilitate focused discussions and were based on the following broad themes:

  • Phasing out coal-fired power
  • Political economy of coal
  • Communities and environment: ground-level insights

The event concluded with a session dedicated to open-ended discussions and deliberations on the way forward.

Owing to the Covid-19 pandemic, the event was held virtually on Zoom. The invitation-only event was attended by 37 participants from various grassroots organisations, research groups, academic institutions, and consultancies.  The varied and rich discussions at the roundtable brought to focus key areas of discourse and action that would be essential toward a just and smooth transition.

Based on the deliberations at the round-table, over 20 of the participants came together to sign a collective statement on the issues and priorities to be addressed in order to enable and manage a fair transition away from coal in India.

India’s energy sector is in the early stages of a slow but steady transition. While there are various studies which analyse the potential pace of the transition with a focus on decarbonisation, its required physical infrastructure and associated investments, one relatively neglected dimension is the implication of the energy transition on public finance in general, and energy taxation in particular. The energy sector, and in particular, fossil fuels are a significant contributor to the overall revenue of India’s central and state governments. This revenue predominantly comes from the petroleum (& natural gas) and coal sectors, which contributed about Rs. 6 lakh crore of the total Rs. 6.5 lakh crore revenue from the energy sector in 2019-20. The Centre and states are quite dependent on the energy sector for their taxation revenues, with the Centre’s dependence being as high as 25%.

As the energy sector moves away from fossil fuels and shifts towards a greater share of renewables and greater electrification, these tax revenues will come under strain. While this transformation away from fossil fuels is likely to take place over the next two decades, the attendant reform in the tax regime is also likely to be very complex and involve nuanced political negotiations. Therefore, it is important to anticipate the fiscal challenges that may arise out of the transition and prepare for it. A starting point is to commence discussions on a gradual transformation of the taxation regime, going beyond just the energy sector or even just indirect taxes. In this context, there is a need for a deeper understanding of the role of the energy sector in the country’s public finance, and how this is likely to be impacted with the energy transition. Such an understanding can help to begin a conversation that can help identify suitable fiscal alternatives and taxation regimes to ensure that public revenue streams can be suitably reworked as the structure of the energy sector changes.

The objective of this working paper is to develop such an understanding in order to build a discourse around this important topic, rather than to recommend any specific measures.

An article on this topic was published in The Indian Express on 3rd March 2021.

 

Minor corrections in Table 4 have been made to this version from the one uploaded in February 2021.

The role of Pradhan Mantri Ujjwala Yojana (PMUY) in providing relief to the sections most vulnerable to the ongoing COVID-19 pandemic highlights the importance of the domestic LPG sector now and going forward. However, while India has achieved near 100% coverage of LPG connections, latest NSSO data suggests that nearly half of rural India still relies primarily on solid fuels for its cooking needs. Thus, significant efforts are needed to bridge the gap between connections and sustained use in rural India. Addressing challenges of affordability, behaviour change and quality of supply and service are crucial to ensuring sustained adoption of LPG. These issues are very pertinent now, as urban India may move to other cooking fuel options such as piped natural gas or electricity, leading to a situation where OMCs are left mainly with rural and under-served consumers in the domestic LPG segment.

Therefore, in order to provide long-term quality service, systemic issues relevant to rural consumers need to be identified and remedied through strong accountability mechanisms that go beyond just individual grievance redressal. Presently, such systems in the domestic LPG service delivery appear to be very weak and inadequate. In this report, we study accountability mechanisms in domestic LPG sector, and highlight issues of uneven accountability of OMCs, aspects of distributor viability, and mechanisms that do not take consumer grievance redressal systems into consideration, among other things. In order to effectively link grievance redressal mechanisms and systems of accountability, we highlight that there is an immediate need to ensure consumer information through transparent and detailed billing and data dissemination.

We analyse the Distributorship Agreement and Marketing Discipline Guidelines to highlight the issues in the sector and suggest ideas for improvement. While there are some accountability mechanisms regarding distributors, there are practically no mechanisms and systems to hold OMCs accountable regarding their responsibilities towards consumers and distributors. This is a matter of serious concern, as OMCs are the most critical link between the government and consistent usage of LPG by consumers. Going forward there is a need to amend the guidelines and agreements through a consultative process to ensure they take into account current realities and to incorporate standards of performance targets for OMCs and distributors alike.

Before the flame of Ujjwala dies out completely, these issues need to be understood and addressed so that the massive public investments made towards realising the social and developmental goals do not go in vain.

CERC published a staff paper on the mehanism for compensation on account of Change in Law for compliance with the Revised Emission standards notified by the MoEFCC, with respect to Competitively Bid Thermal generating stations, and invited comments on the same. Prayas submitted suggestions towards better implementation of the suggested mechanism for Section 63 plants, which included that:

  1. The compensation should be subject to timely adherence to the revised norms, as per the MoEFCC deadline
  2. The compensation should only be allowed if the Emission Control System (ECS) has been operational for a minimum threshold duration
  3. In addition to the mentioned eligibility criteria, the compensation mechanism should only apply to generating stations with PPA cut-off date before 7th December 2017, and to generating station's whose environment clearance does not already mandate ECS installation
  4. Compensation should also be allowed for alternate methods (other than ECS) of compliance to the revised environmental norms

The suggested mechanism also includes some progressive provisions which benefit electricity consumers.

Rumi is an open-source energy-systems modelling platform developed by Prayas (Energy Group) with a focus on demand-oriented modelling. Rumi will complement and strengthen the eco-system of energy models in India, and contribute to enriching the understanding of possible future trajectories of the energy sector as it goes through a period of rapid transition. Rumi will soon be made available for free download and use by the wider energy research community.

This slide-deck provides details about the approach, methodology, assumptions and data sources used in the current version of Rumi. It also provides some insights and results obtained from the model, and comparisons of its results with a few other similar models.

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