India's green electricity tariffs may lead to financial losses for distribution companies

• Published 1 month ago
• By SuperAdmin

The ministry of power's plan aims to boost renewable energy uptake among large consumers by introducing green tariffs.

New Delhi: India's initiative to promote green electricity through proposed tariffs could result in significant financial losses for distribution companies, according to a study by the Centre for Social and Economic Progress (CSEP). The ministry of power's plan aims to boost renewable energy uptake among large consumers by introducing green tariffs. However, the analysis suggests these tariffs are set approximately 15% below the average cost of supply, potentially straining the financial health of energy distributors.

The report highlights that the proposed green tariffs would not cover the full cost of energy supply, posing substantial financial and operational challenges. Distribution companies, already under financial pressure, could face further difficulties if high-paying commercial and industrial consumers switch to these lower-cost green options.

The analysis also points out operational challenges, including the ability of distribution companies to meet the demand with a reliable supply of green energy, given the intermittent nature of renewable resources. This could complicate energy management and affect service reliability.

Furthermore, discrepancies in renewable energy procurement costs across different states add another layer of complexity. States like Kerala, which rely more on cheaper hydro resources, face lower costs, whereas Rajasthan, with its expensive wind energy, sees higher costs.

The CSEP urges a reevaluation of the tariff proposal to ensure that it does not lead to unintended negative impacts on the financial stability of distribution companies or the equitable access to renewable energy. The report calls for regulatory adjustments that accurately reflect the true costs of green energy supply and distribution.

As India continues to push for a transition to renewable energy, ensuring the financial viability of this shift remains a critical challenge that needs addressing to maintain the momentum towards achieving the country's energy sustainability goals.