Mint’s annual energy conclave, Energyscape, which was held recently in Delhi, saw policymakers, industry captains and top bureaucrats debating India’s evolving integrated energy reforms. Union minister for power, and new and renewable energy Raj Kumar Singh highlighted the importance of the strategic push to make India’s grid-scale battery storage programme the largest in the world, while increasing the power generation capacity from non-fossil fuels to 66% by 2030 from the existing 38.5%.

Panellists who participated in the discussions on India’s next-generation power sector reforms were power secretary Alok Kumar; Abhishek Poddar, the managing director and head of Macquarie Infrastructure and Real Assets; Amplus Solar managing director and chief executive Sanjeev Aggarwal and Neeraj Menon, a partner at Trilegal.

What’s the status of the government’s move to allow consumers to port to a power supplier of their choice through the Electricity (Amendment) Bill, 2021?

Kumar: That was a budget announcement for this financial year. So, that is the time frame we are working on. This is really a second generation power sector reform. In late ’90s we opened up generation and transmission, and you can see the type of capacities that have come on-stream. Private sector’s contribution has been huge. We are seeing this at an even larger scale in renewable energy. In the conventional (power) sector, government’s share is half, both centre and states, about 50% is private. In renewable, 80-90% is private. This is the power of opening up and competition. Similar things have happened for transmission. We don’t have dearth of developers, and good competition is coming. I firmly believe that same thing will happen in distribution.

When you talk of next generation reforms, there are two large areas. First, electricity markets—large number of reforms will happen, without which we cannot have energy transition. Second, what the consumer gets, say, in terms of choice, quality and reliability and cost of power for value-added products.

For a fund as large as yours what does the move promise?

Poddar: There is immense amount of capital not just for Macquarie, but the broader investment community, to invest in infrastructure assets, specifically around the entire theme of energy transition. As more dollars get printed in the US, those dollars will find its way into the alternative investment classes. That is the macro theme that is playing out. We have seen significant amount of investments into the renewable space and most big platforms are backed by financial institutions. If the last mile, the distribution side, opens up, it will attract a lot of interest. The entire infrastructure needs to be strengthened. Specifically, we need to enable two-way communication and build flexibility in the network with more electric vehicles coming in. A lot of improvement needs to be done. I have absolutely no doubt you will find investors extremely interested to be a part of this transformation.

How difficult is it to push through the next generation power sector reforms?

Kumar: No reform is easy. Our citizens need a better deal (and) they will take it. Reforms are a process in a democracy. There is a huge demand for better services. I am sure we cannot have the services from monopolies, either government or private sector. I am convinced these reforms will come in less than one year.

Are states open to these reforms?

Aggarwal: I agree that no reform is easy and there will be resistance from states because electricity is a very sensitive social and political subject. Most times it is considered tool for the electorate, be it free power for a certain category of consumers or other sops. So, as soon as you try to take it away there will be resistance. Now, how much political will is there to push it through, that is going to be the real test. It will be a gradual process but the time has come, more so from the technology side, distributed energy and the way it is shaping up.

So, this is a complete energy transition which is not happening only in the electricity but also on the transportation side which is electric vehicles, mobility and all types of new technologies such as green hydrogen that honourable minister spoke about. It is extremely important that we change our rules, regulations, acts, laws to keep pace with the change in technologies.

Neeraj, do you see big bucks lining up for India in a post pandemic world?

Neeraj Menon: Like Abhishek mentioned there is no dearth of capital. There is enough and more capital. What the private sector wants is a clear assessment of risk. How is their money going to fare in three, five, 10, 15 years is what they need…because they know there are risks in the sector. Everyone appreciates that. So, if there is a clear assessment of risk and a clear methodology on how they can mitigate or tackle that risk, I think there is enough capital and it will flow.

To give you an example, we have seen privatisation of the distribution sector…Even in a sector which does not have a pilot in India like the offshore wind, you had 35 companies lining up to submit their EoIs (expression of interest). So, clearly even without a precedent there is enough interest to put in that kind of capital into the sector because the companies believe in sustainability, climate policy…

So, all that I think what we need to do in terms of rules and regulations as Sanjeev also mentioned is to have a distinction between what to over legislate and what to not legislate? Because there are certain things that we should try and not legislate too much like smart mobility or smart transport, EVs (electric vehicles). There has to be a way to not make it too complex because the enablers that are driving this don’t like a very complex ecosystem.

The government has also set up an ambitious target to bring down India’s average aggregate technical and commercial loss to 12-15%.

Alok Kumar: We should remember two things—there has been a lot of improvement. Its a general feeling that all discoms are useless. No, this is not correct. If ACS (average cost of supply)-ARR (average realizable revenue) gap has come down by half, only discoms have done it. If losses have come down, only discoms have done it. So, these reforms are pro-people…and who is opposing? Any monopoly if you demolish, they will resist. They will oppose. So, there are vested interests within the systems…the day is not far when people will see it and people will demand in India.