While being at the threshold of 21st century transitions, India’s electricity sector continues to grapple with 20th century challenges such as operational inefficiencies, unreliable supply, access challenges, theft, non-payment and distressed finances. The Government of India has committed to long-term goals of energy access security for all and electricity transition to cleaner sources. The disruptions caused by the COVID-19 pandemic are consequential for both. While exacerbating the existing weaknesses in the sector, the pandemic could also affect the trend toward an electricity transition.
A new report released by the CPR Initiative on Climate, Energy and Environment, ‘Powering through the Pandemic: Will COVID-19 reset India’s approach to the future of electricity?’ by Ashwini K. Swain (Fellow, CPR) explores the impact of the pandemic on India’s electricity, government responses, and thus, suggests a structural approach to building a resilient electricity future. It finds that the COVID-19-linked disruptions in the electricity sector are pervasive and have alarming secondary effects and long-term consequences. If not addressed strategically, these impacts will risk India’s long-term electricity goals. While the Central and state governments have been swift to recognise the disruptions, the responses fall short of a strategic approach. The band-aid approach, focused on fixing existing patterns in the sector, appears inadequate to challenges. Ironically, the long-term electricity reform agenda – proposed in major legislative and policy amendment proposals from the Centre – shaped in times of a pandemic has failed to internalise the challenges thrown-up and insights gained from the COVID-19 experience.
On July 29, 2020, Arvind Subramanian, Vandana Gombar, Ajay Shankar, Ashwini K. Swain and Navroz K. Dubash discussed the findings of this report, and the future of India's electricity in a post-COVID-19 world. Watch the full recording of this webinar above.
The report also argues that the combination of COVID-19 disruptions, technological driven cost reductions in renewable energy, and the longstanding financial and governance problems of the sector combine to create a ‘critical juncture’ for the sector – a moment to envision a new and alternative configuration of technology, institutions and politics that could transform Indian electricity. While this a long-term and complex conversation, the report suggests two illustrative pathways toward these goals.
Electricity as an instrument of a productive and resilient rural economy:
A resilient electricity future necessitates an alternative approach to electricity access security that enables a shift from subsidising minimal welfare through electricity to enhancing productivity by subsidising fixed costs for clean energy infrastructure to the poor. Here are two options that can reinforce each other:
- Drive a shift away from ‘redistributive welfarism’ (that prioritises subsidised tariffs for the poor while compromising on the quality of service) to ‘productive power’ that empowers and enables the poor to pay for better quality service through productive use of electricity
- Shift away from recurring and inevitably rising tariff subsidies to one-time clean energy infrastructure support for targeted beneficiaries and incentivise productive use of electricity.
Electricity transition for productive recovery:
In planning the post-COVID-19 recovery, India needs a strategic approach that treats the electricity transition as a catalytic force for rebooting the economy while redirecting electricity in the direction of more resilience. Here are three steps in that direction:
- Promote domestic manufacturing of clean energy equipment based on a broad strategy that adopts a green industrial policy approach, supports innovation and addresses distributive questions.
- Seek opportunities to accelerate retirement of old and inefficient coal-fired plants through a timebound strategy based on adequate consideration of economic, environmental and political consequences.
- Consider the costs and risks associated with fossil fuel in energy planning, and strategically use tax and subsidy instruments to keep clean energy cost competitive against fossil energy.
You can read the full report here.
Learn more about CPR-ICEE’s work on India’s electricity transition here.
About the CPR Initiative on Climate, Energy and Environment (CPR-ICEE)
The Initiative on Climate, Energy and Environment at the Centre for Policy Research (CPR-ICEE) aims to stimulate an informed debate on the laws, policies and institutions shaping climate, energy and environmental governance in India. Our research focuses on improved understanding of climate, development and environmental challenges, and pathways to improved outcomes, in four key areas: climate policy and institutions, the political economy of electricity in India, low-carbon energy demand patterns in urban areas, and air quality governance. For live updates on our work, follow us on Twitter and Facebook, or email us at email@example.com
The views shared belong to individual faculty and researchers and do not represent an institutional stance on the issue.