Foreign IPOs and M&As to Globalize the Power Industry

NEW DELHI : The power sector is going global under Vision 2047, the government’s plan to make India one of the world’s top three economies by the 100th anniversary of independence.

Strategies explored by the Department of Energy include initial public offerings (IPOs) in global markets, mergers and acquisitions (M&As) in more overseas strategic resources, and expanding the companies’ global footprint Indians, said two government officials familiar with the plans.

The playbook includes peer-to-peer (P2P) energy trading to meet increased energy demand and drive economic growth while ensuring access to cheap, reliable and clean electricity. The proposed plan also involves improving corporate governance practices in public electricity distribution companies, reducing tariffs, reducing cross-subsidies and shortening the duration of the power purchase agreement by 25 year.

Electricity costs are an important component of manufacturing expenditure, and any cuts will help the government advance Make in India, implemented through the Production Linked Incentives Scheme.

Emphasis is also placed on building autonomy in emerging technologies and promoting domestic production of critical equipment such as Supervisory Control and Data Acquisition (SCADA), transformer and batteries at the amid growing Chinese hacking attacks on Indian critical infrastructure such as power grids. Other initiatives explored include promoting competition through the abolition of distribution licenses and increasing private participation through privatization and franchising.

“It’s still at the discussion stage, we need to get the states on board,” one of the officials quoted above said on condition of anonymity.

To help improve cross-sector energy efficiency, the plan plans to develop market instruments such as carbon credits, energy certificates and tax incentives.

It also involves promoting living comfort by enabling consumer choice and grassroots innovation with minimal institutional intervention. There are also proposals to facilitate consumer-centric business models and regulatory structure to ensure the technical integration of decentralized networks.

To accelerate India’s transition to green energy and zero carbon emissions, the focus could be on decommissioning power plants operating below the operating threshold and on scaling up hydroelectricity, and on the promotion of small-scale technologies such as hydraulic gravity machines and hydrokinetic turbines. The plan is to increase the operational flexibility of coal-fired power plants and improve the utilization of gas-fired power plants.

One of the proposed objectives is to develop regional electricity markets supported by regional networks which will involve the construction of new interconnections, institutional arrangements and a regulatory framework for cross-border coordination and the promotion of the ambitious One Sun program One World One Grid (OSOWOG).

Mint had previously reported that about three pilot interconnection corridors had been shortlisted for detailed technical and financial viability under OSOWOG. They are: South Asia (India)-Southeast Asia (from Myanmar to Thailand), South Asia (India)-West Asia and West Asia-Africa.

Two options are also being explored for connecting with Gulf Cooperation Council (GCC) countries. One is an undersea link to connect Gujarat with Oman, and the other is an overland route via Pakistan and Afghanistan to Western Asia.

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