Power Minister RK Singh in conversation with Moneycontrol Managing Editor Nalin Mehta at the Policy Next summit on January 18.
Energy security and transition is perhaps the most important problem facing the world today. To understand how the Indian government plans to tackle this pressing issue, Moneycontrol Managing Editor, Nalin Mehta, held a fireside chat with Union Minister for Power and New & Renewable Energy RK Singh at the Policy Next summit held on January 18.
The minister answered questions on a wide range of issues – from not being concerned about adding thermal power capacity, to the attitude of developed countries when it comes to energy transition – offering a glimpse into the future of India’s energy policy.
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We hear a lot about the target of uninterrupted power supply over the next couple of years…
It’s here, it’s now because the rules have already been promulgated. That’s again something that I sort of hammered down in the meeting today with all the states – any load-shedding, you get penalised. It’s (an uninterrupted power supply) there because the capacity is there, and the ability to transfer electricity from any corner to any corner is there – we have strengthened the distribution system. So there is no reason why any DISCOM should do load-shedding. So if they do load-shedding, they have to explain why and they have to compensate the consumers. Now, all that I am asking is for the consumers to stand up and complain. We have set up computer grievance redressal mechanisms in every division and every circle. So, (consumers should) file a complaint.
A little earlier in the evening, we had Jayant Sinha, Chairman of the Parliamentary Standing Committee on Finance, addressing us from his constituency, Hazaribagh, and there was an issue (with electricity). That’s just a small example, but how do you get over those kinds of challenges at the ground level?
Earlier, there was this misconception – since power is in the concurrent list, people felt that the state government has total control over distribution and the central government only looks after generation. Nonsense. The entire sector is in the concurrent list. That means the Centre has as much authority over distribution as the state has over generation. It’s across the board. So, we made rules and those rules are made under law. They are subordinate legislation. They have been laid before Parliament. Any violation of the rule is a violation of the law and that entails penalties. And I have already told everybody that we shall prosecute you if you are in violation of the rules. And we have made rules which provide for this, that there shall be no load-shedding.
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Now why this load-shedding would be happening here and there – I am getting these (instances) investigated – is that some distribution companies may have run out of money for buying power. (For) also, I have made a system.
I have been saying two or three things. One is that if you are a state chief minister or if you are a state power minister and you want to give subsidies, go right ahead. Give everybody a subsidy, give free electricity to everybody, I have no problems at all. But if you don’t want the consumer to pay, you have to pay. So that subsidy amount has to be paid upfront; we have made rules. And if you don’t pay the subsidy upfront, it does not get passed through.
Second, you (DISCOMs) buy electricity from the generator (generating company), and you have to pay up. If you don’t pay in 75 days, your connectivity to the exchange gets automatically cut off. Nobody can interfere. It’s built into the system. If you delay for another 30 days, your short-term and medium-term access gets cut off. A further 30 days (of delay in payment) attracts cutting off of long-term access by 10 percent every month. So, if you do not pay up, gradually you won’t get electricity from anywhere.
Now, this has proved so effective that the outstanding dues of Gencos used to be Rs 1.35 lakh crore in 2021 or so, that’s been brought down to about Rs 52,000 crore. And every month they pay installments to wipe that out. And current dues are paid every month. There is no outstanding dues payment.
Now what would be happening somewhere is that some DISCOM may still not be viable enough, not have enough money to pay for the power. I have increased the viability – the losses have come down from 27 percent to 15 percent. And I have made rules to make sure that the losses come down. Now, some DISCOM may still be lagging. Now those DISCOMs have to be supported by the state government. Otherwise, they’ll have to pay a penalty if that happens.
We are getting into election season. In a Modi 3.0 government after the election, what would be, in your view, the three important priorities for the power ministry?
One is capacity. The second is capacity. The third is to bring down the losses from 15 percent to about 10-12 percent.
As far as energy transition is concerned, I am already a world leader. Earlier, all these guys from developed countries would come and they would start off by saying how necessary it is to carry out energy transition away from fossils. Now they don’t, because I am doing better than them in energy transition. Now I talk to them, they don’t talk to me. So as far as transition is concerned, I am well off. So capacity one, capacity two – because in spite of the fact that I have added almost total capacity of what use existed, I’m near doubling it, despite that, I still have to add more capacity.
One of the things that you’ve spearheaded yourself and what the ministry has done very successfully is to put in place a system for timely payments from DISCOMs to generation companies. Now, while that is on track, there is an issue of legacy debt for the DISCOMs. So how do you handle that?
That’s what I brought down, the legacy dues. The current dues are all up-to-date. We are probably the only country in the world where the current payments for balance sheets drawn from Gencos are totally up to date. Legacy dues were Rs 1.35 lakh crores. Now, what I have done is that we said that any payment you make will first go against your legacy dues. So now, how do you manage it? Now, legacy dues, I made it in two installments. So I said that every month, you have to first pay that installment of legacy dues and then you have to pay the current bill. You have to do both. You can’t pay the current bill without paying the legacy dues installment. So that is being paid. The current bills are being paid. And so (we have come down from) Rs 1.35 lakh crore to Rs 50,000 crore.
If I may push you, any major announcements in your sector that we can expect in the interim budget?
In the interim budget, I have several asks. I have placed that before the Ministry of Finance. Let us see.
And what are your asks?
Basically, I want more green finance. I want incentives for green hydrogen, etc. These are between me and Finance (Ministry).
There is a projection that this year, the peak demand could be hitting about 256 GW. Are we prepared for that?
Yes, I hope so. I have added capacity. I have 27,000 MW under construction, that is thermal. I’m trying to get that through as fast as possible. I have 99,000 MW of renewable energy under construction. I am also trying to get that through as fast as possible. So these are under construction. So these are in the pipeline.
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I am now thinking of the next year, the year after that, so I am starting new capacities very quickly, renewable and thermal and hydro. Looking ahead, I see that as the major challenge before me. The fact is that if there is not enough power, our country will not grow at 7.5 percent. So it is incumbent upon us to make sure that we have that power because, without electricity, no industry is going to come. This is very clear. So we have all that capacity under construction. My installed capacity today is 4,26,000 MW. So the peak demand of 2,54,000 MW should not be an issue.
But, in thermal what happens is that typically, on any given day, I would not have about 13,000-15,000 MW because of some niggle here or there. So one has to have that much reserve. The problem is not so much during the solar hours, because I have added that much renewable energy capacity. I am running neck-to-neck insofar as non-solar hours are concerned, where thermal is the requirement.
Initially, there was a feeling that let’s not add too much on thermal because we have to transition anyway. But the point is that storage is expensive. I came out with bids for storage: very expensive. I cannot afford to bill my people at Rs 12.50 (per unit) for electricity. It is Rs 10 a unit for storing electricity for one hour of renewable energy. So I still have to rely on thermal until and unless the storage costs come down. So I have to add thermal. So I’m adding thermal. And I don’t make any apologies for it, plain and simple. Why? Because my per capita emissions are still the world’s lowest. So I do not make any apologies. I am brazen about it. If needed, instead of 87, 000 MW, I will add 1,20,000 MW of thermal. But there’s not going to be any shortage of electricity because without that we can’t grow.
Mr Singh, you spoke very forcefully about India being ahead of track for the renewable energy targets for 2030. This is something the Prime Minister has personally led from the front as well. I know he’s also talked in the past of 100 percent over 2070 and so on. While we are ahead of track, how much investment is needed and where do you see that coming from to achieve the remaining targets?
We are getting investment. Bloomberg rated us as the most attractive destination for investments in renewables in the world. So I am getting investments. I have no problems with that. What I need to do is to get more and more storage capacity. So we had one PLI (Production Linked Incentive) for manufacturing battery storage. Unfortunately, that first PLI focused almost entirely on mobility, for which you need a different type of storage. That type of storage is something that requires fast charging and fast discharge.
The storage that we need for grid-scale, storing thousands of megawatts for 8-10-12 hours is different. So we are coming up with another bid for another PLI for storage which will be for grid-scale storage. Once that manufacturing happens, then the price of storage will come down. So, from Rs 10 it has already come down, globally, I believe to about Rs 6-7.5. But we want it to come down further.
Pump storage is cheaper. Pump storage I am adding (capacity). We have surveyed all the possible sites and we are trying to operationalise it as soon as possible. That will cost me about Rs 3.5-4 per kilowatt hour. So once this gets on track, then I may not have to push so much for thermal. But till this gets on track, that is necessary because you need round-the-clock electricity.
But I am getting investments. Even for storage, PLI, I am getting investments. For manufacturing of solar cells and modules right from polysilicon upwards, I am getting investment. So we are not having to put any money in. Our business world is now big enough.
There was a push to indigenise manufacturing in this. So what’s the response been and where do you think we are compared to Chinese manufacturers?
First, what we did was, put customs barriers. Customs barriers were huge, and hefty. So 40 percent on modules, we are still there, and 25 percent on cells. Then we also came out with non-tariff barriers because what happened was that despite these customs barriers, you had manufacturing from, let’s say, China being off-shored to countries with which we had an FTA. So basically, you stamp it with a country where we have an FTA and you escape the customs barrier. So we brought in a non-tariff barrier – an approved list of models and manufacturers. So that’s worked.
The net result of all this has been that the capacity of module manufacturing has gone up from about 20,000 MW to about 50,000 MW now. It’s still going up further as much of the capacity is under construction. So I’ll have, by 2030, about 24,000 MW of manufacturing capacity from polysilicon to modules, the entire value chain. And I’ve said that I am not going to accept anything below 19 percent efficiency. So that is another thing which I’m looking at. And this 19 percent efficiency, this lower threshold, will keep getting up. So maybe after a year or two years, I’ll make it 21 percent as a lower threshold, and so on.
So I already have a 50,000 MW manufacturing capacity of modules. Cells, polysilicon to modules, 24,000 MW by 2030 will be there, it’s under construction. I will have the entire value chain of about 50,000 MW polysilicon to modules and 50,000 MW cell module by about 2030. So about 100,000 MW. We are already exporting now, to the United States, etc. That volume of exports is going to grow.
Wind, I am already a leader. We export wind equipment already. Some larger capacity wind turbines have to be made here. So I have told my manufacturers that there’s going to come a time when I am going to say that I will not accept any turbine, less than, let’s say, 5 MW or whatever. But about 80-90 percent of the manufacturing is already here. We export from here.
Hydrogen, I am going to be a leader, as I said.
HVDC (high-voltage direct current) transmission lines, that is one field where I want entrepreneurs to get in. So some of the manufacturers are getting in.
With thermal…what had happened was the world thought that we are moving away from thermals. So the manufacturing capacity of thermal equipment – boilers, steam turbines, etc have come down. We only have two manufacturers left. So that again has to increase.
On the question of green hydrogen, this is something the Prime Minister has talked about. You have announced a whole bunch of incentives. What’s the response been on the demand side since the incentives were announced?
(The response has been) Great. We came out with a bid for PLI for making green hydrogen. It was oversubscribed, that bid. So that is good. We have also come out with a bid for manufacturing of electrolysers because the world capacity for making electrolysers is also limited. So that response has also been very good. So I am getting investments.
Making of green hydrogen, apart from the PLI, people are setting up capacities by themselves also. So the capacities are being set up. The total capacities which are under different stages of planning is 7.8 million tonnes, which is pretty good and one of the largest in the world.
Barriers set up by some countries is a worry. One country, I will not name it, gives $3 of subsidy per kilogram of green hydrogen. Some European countries have come out with other non-tariff barriers, saying that for the generation of renewable energy and electrolysers, the distance between them should not be more than 500 kilometers. These are non-tariff barriers. So we have said that you must remove these because you have been lecturing us, the developing world, about the values of free trade. Now why this protection? They have also got into agreements with other countries for importing green hydrogen lines, South American countries, etc. So, I questioned (this) and said ‘you should buy green hydrogen on the basis of open bids and then everybody will compete’. So those barriers will break down and we shall emerge as the biggest exporter in the world. I don’t have any doubt about that. Because you can talk about making green hydrogen in Peru or Africa. They will have the sun no doubt, but you don’t have the transmission. You don’t have the ecosystem. They can’t make green hydrogen cheaper than I can. So ultimately, I think the price will prevail.
All these developed countries, apart from needing green hydrogen, also need carbon credits because they don’t want to sacrifice their standards of living, which necessitates a large quantum of energy spent on heating, etc. They want carbon credits. So for green hydrogen, we will be giving carbon credits. Those who buy green hydrogen from here will get a part of the carbon credit. So we are getting into agreements, they want that. So ultimately, we shall be the major exporter.
India is in a unique position where, while we are championing green energy in the way that you have outlined, we are also probably the only country in the world barring China which is also adding coal capacity. Now, there is a concern in certain quarters that globally the investment that is coming down. So are you concerned about that in terms of the investment for the extra capacity you’re adding here?
I have the money. The economy has the money. So finance is no issue at all, whatsoever. The fact is that different manufacturers are also coming and many of them are manufacturers from the West, who are going to give us equipment. So that is no issue.
When it comes to reality, when it comes to facts, everybody’s dualistic. For example, when the gas supplies from Russia got disrupted because of an attack, Germany started its thermal power plants, and the UK started its thermal power plants. Suddenly, all the statements emanating from the developed countries were not about transition, but about energy security. And they said that energy security is of paramount importance. So they bought gas from wherever. Now gas is a fossil. You burn gas, you emit carbon dioxide. So all this talk about how necessary it is to transition was gone. This is reality. So let there be no mistake – every country looks out for its interests of growth and the interests of its people. You have grown using fossil fuels. You – the developed world – are responsible for 85 percent of the carbon dioxide load which has caused this rise in temperature by 1.1 degree. Eight-five percent of that emission has come from developed countries. Our contribution is just about 3-4 percent, whereas my population is 17 percent of the global population. Our per capita emissions are one-third of the global average; the per capita emissions of Europe are three times the global average.
So they (developed countries) are still spewing at the fastest rate. I am spewing at the least rate. They are responsible for 85 percent of global warming already. And they are not going to reduce their per capita consumption, let me tell you this. That’s why they are on the lookout for carbon credits so that they can offset it. That is the main thing.
So they talk and talk, but they haven’t done anything. If they were serious about doing something, they would have worried round-the-clock about renewable energy; they would have added capacity for making storage batteries. They didn’t do that. Why? Because they thought that just speeches and talks once a year when countries gather for COP would be sufficient.