Electricity Utility Sector: Break The Mould

Electricity Utility Sector: Break The Mould

The electric utility, traditionally, is one of the most conservative and defensive sectors, with mostly government-controlled entities. After the opening of the sector, there is substantially private sector investment in both regulated and unregulated services. A few years back, independent power producers (IPPs)/independent power transmission companies mushroomed in India. However, for the last two to three years, they have been under severe pressure, and many of the IPPs have been liquidated, while others, including the large and reputed ones, are languishing. Similarly, in the distribution sector, UDAY scheme was launched with a big bang about two and a half years back, but it has again gone to the back burner and the expected improvement in the operational front is yet to be visible. One must be wondering what is behind such huge performance discrepancies in a short time? The electric utility sector is facing transformation on multiple fronts. The sector is under pressure from policy makers, regulators, investors, consumers and public at large to convert electricity generation into low-carbon technologies to reduce co2 emissions and climate risk. The entire power grid is also transforming from fossil-fuelled centralised structure, where the bulk power was generated by large power plants, to a more complex decentralised system with bi-directional power flow from non-dispatchable energy sources, and information technology and new regulatory frameworks are fundamentally changing the way the market operates commercially. Many of the economists are characterising the sector as “A world turned upside down”. Read More…

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