Renewable Energy

Due To Renewable Energy Transition Power Company Losses Are Mounting

Prime Minister Narendra Modi offered what he dubbed “five nectar elements, Panchamrit” at the COP26 session in November 2021, each one a decarbonisation commitment. He concluded with a flourish, predicting that India will achieve net zero emissions by 2070.


It was declared less than a year later that 40% of installed electrical capacity was coming from “non-fossil fuel sources,” or wind, solar, and hydroelectricity power – a figure accomplished eight years ahead of India’s COP-21 promises. As a result, India is now the world’s third largest generator of renewable energy.

This renewable energy revolution presents a threat to all traditional power firms, but especially to the less agile and more inertia-ridden state-owned utilities and power distribution company, which are sometimes politically compromised enterprises saddled by bad financial sheets.

The power distribution sector’s persistent losses, nearly Rs 90,000 crore for FY 2021, prompted a Rs 3,00,000-crore power discom reform scheme, but while tariff reform attempts over the last decade have called for a winding down of cross subsidies, the industry’s march towards renewables has struck the gavel on the matter.

The aggregate losses for state distribution utilities grew by 66.48 percent from Rs 30,203 crore in 2019-20 to Rs 50,281 crore in 2020-21.

Against the backdrop of a struggling state power distribution sector, it seems that only major private sector players like Adani and Ambani will do the heavy lifting in meeting the 500 GW renewable energy target for 2030.

Big private players, including Reliance, Adani, Arcelor Mittal and JSW, are hogging much of the announced investments in renewables, a kind of niche billionaire boom in what will be a life-altering transition for India’s billion-plus citizens.  

Presently, about a third of power generation is owned by state governments, a quarter by the central government. State institutions enjoy complete control over regulating transmission, distribution, tariffs and retail. All of this is about to change. 

Reference- Money Control, Mercom India, Economic Times, CNBC TV18, Business Today