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India's energy landscape is poised for a dramatic change as fresh investments in wind and solar projects will overtake those in fossil fuel-based plants, and the government is confident of wiping out state distribution companies' losses by 2019, removing the power sector's most stubborn bottleneck.
"Already, we are not encouraging any fossil fuel projects. Investment thrust will be totally skewed towards renewables. That's loud and clear," Power, Coal and Renewable Energy Minister Piyush Goyal told ET in an interview. He said market forces would work against polluting fossil fuels.
Goyal said renewable costs are falling steeply and tariffs from such projects remain constant for quarter of a century unlike fossil fuels, which have seen dramatic increase in costs in recent decades. Further, renewables add to the country's energy security and help in keeping the environment clean.
The minister said state governments, which control distribution companies (discoms), are fully on board about the new package to improve power distribution network in the country, which provides the vital link between power plants and customers.
He said the proposal would deal with past losses on which states, Centre, the Reserve Bank of India and banks have worked out a solution. There is also a three-year plan to cut losses caused by technical and commercial issues to 15 per cent from 27 per cent now.
Goyal said the proposal was in the final stages. It includes measures to ensure banks don't indiscriminately lend to discoms and states are conscious that they can't allow discoms' losses to accumulate over a long period of time. "Fortunately, all states have agreed with us. Now we are fleshing that out in more detail. The Rs 60,000-70,000 crore loss of discoms will be zero by 2019," he said.
NEW TARIFF POLICY
The government is also finalising a new tariff policy that will give bigger thrust to competitive bidding and make sure that discoms buy part of the power from renewable plants. Those investing in fossil fuel plants would be required to add some renewable capacity also. The policy would also encourage waste-to-power plants, which would also be useful for the Swachh Bharat programme championed by Prime Minister Narendra Modi.
"We are also providing that for renewable energy there will be no interstate transmission charges. Wherever waste-to-energy — as a part of waste-to-wealth that the prime minister has articulated — can be set up, must be set up and state will have to buy that power," Goyal said.
The government will also encourage old plants, both conventional and renewable, to upgrade to higher-capacity modern plants. This will add capacity quickly because they already have land and various clearances required, he said.
Goyal also ruled out bailout of companies that have won auctioned coal mines with high bids that seem unviable, maintaining the government's stand. "This is a big problem in India. For years, people thought whatever we do, the government will bail us out. I think rules have changed, it's an equal-opportunity, fair and transparent government. We do things in public domain," he said.
"We didn't press the button on their computer screens at the time of biding. In the bid document, it is mentioned five or six times that whatever you bid you have to bear it; it will not be allowed to be passed on to the consumer. Out of 35, if two people have a problem, whether system is right or those two are right you can choose," the minister said.
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