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Accelerating India's Energy Transition through Electricity Act: Part 5

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Rethinking the Role of Institutions for Effective Policy Implementation in Power Sector

By Disha Agarwal

The Government of India has proposed much-needed amendments to the Electricity Act 2003, to make the power sector efficient, sustainable, reliable and affordable. But the sector with its multiple state and central bodies involved in policy-making, implementation and governance at different levels, needs effective coordination to achieve these goals. We suggest the setting up of a central, statutory institution - the National Electricity Council, to do this.

Why we need a National Electricity Council?

The concurrent status of electricity gives states decision-making powers along with the Centre. And over the years, the sector has grown immensely with multiple institutions involved in policy-making, implementation and governance. Each institution has a set of functions to perform, objectives to meet and jurisdictions to serve (see figure below). Given the scale of the sector and its operations based on a centralised, fossil-fuel dominated system, it is challenging to align all its institutions towards an alternate vision and style of functioning that these reforms envision. Delivering on the new goals and targets will mean new and additional roles and responsibilities for all institutions and actors and close coordination between them. This is critical as well as complex to achieve. It needs a coordination body.

Figure 1: Institutional framework governing India’s power sector

Source: CEEW-CEF compilation

What the National Electricity Council will do?

To navigate through the power sector’s multi-institutional landscape and build a viable and sustainable sector, the Government of India must set up the National Electricity Council (NEC) through amendments to the Electricity Act 2003.

The NEC must possess the powers to direct tasks to central government agencies in line with their stated roles and responsibilities and play an active role of reviewing, monitoring, coordination and thought leadership. The NEC’s objectives could be to monitor progress towards national targets and discuss gaps and bottlenecks in implementation. It could recommend remedial actions, proactively suggest model frameworks, tools and mechanisms to ease planning, deployment, procurement and operations, and assess strategic opportunities for India to lead the energy transition.

For example, the NEC could:

  1. Monitor the application of grants, loans and any other funds allocated by the central government
  2. Track preparedness of states to eliminate cross-subsidies
  3. Coordinate matters relating to grid planning and integration of renewable energy to meet the stated target
  4. Identify measures to gain a competitive edge in developing new and advanced technologies

The NEC could be a Centre-State coordination, review and monitoring committee that convenes quarterly under the joint chairmanship of secretaries at the Ministry of Power and the Ministry of New and Renewable Energy. The structure and composition of the NEC is illustrated below.

Figure 2: Proposed structure for the NEC

Source: CEEW-CEF analysis

Re-visit functions and establish accountability of key institutions

The Electricity Act 2003 should also re-visit the functions and duties of key power sector institutions and establish accountability through appropriate penalties for non-performance. For example,

  • With the increasing penetration of renewable energy, the National Load Despatch Centre (NLDC) must monitor and report the quantum of RE curtailment in states and reasons for curtailment.
  • State Load Despatch Centres (SLDCs) must share relevant data and information with NLDC for this analysis, and NLDC must make regular recommendations to reduce curtailment to a level necessary for system security.
  • The Central Electricity Authority (CEA) must adopt a bottom-up approach to integrated resource planning (IRP) to build an optimal, cost-effective and sustainable electricity system. For that to happen, CEA must develop and disseminate guiding frameworks, toolkits and processes that a state can adopt to conduct a robust IRP exercise.

Such new roles and responsibilities must be assigned explicitly for reducing discretion, ensuring greater alignment between the union and state governments, enhancing the ease of doing business and accelerating the pace of the energy transition.

India has set itself some ambitious energy targets. However, in the absence of strong institutions with clear performance standards, and a coordination mechanism, our struggle to revive the power sector will only get harder.

Disha Agarwal is a Programme Lead at the Council on Energy, Environment and Water.Send your comments to disha.agarwal@ceew.in.

Read Part 1: Separating Regulation and Adjudication Through a Proposed New Judicial Arm

Read Part 2: What Works and What Does Not in the Proposed Electricity Act Amendments

Read Part 3: Can the Amended Electricity Act Unlock More Private Capital for Renewables?

Read Part 4: Centre-State Alignment is Key to Accelerating Renewable Energy Deployment in India