India Pushes Power Utilities to Cut Electricity Supply Costs

India is stepping up efforts to reduce the cost of electricity supply as high power tariffs continue to burden households and industries. The government wants power utilities to manage fuel sourcing better, plan capacity additions more efficiently, and increase the use of cheaper clean energy. These steps are aimed at making electricity more affordable while improving long-term energy security.

At present, industrial power tariffs in India remain significantly higher than in several competing economies. This cost disadvantage affects manufacturing competitiveness and adds pressure on end consumers. The government believes better planning and timely decision-making by power utilities can help bring tariffs down.

Better Coal Planning And Timely Capacity Decisions

One of the key focus areas is coal procurement. Power utilities are being encouraged to lock in coal supplies when prices are lower instead of relying on costlier spot purchases later. Timely planning of coal-based capacity additions is also seen as critical to avoid supply shortages that lead to higher power costs.

Currently, planning for new coal power capacity is largely guided by the Central Electricity Authority. However, the government wants state utilities to play a more active role in deciding their own coal and renewable capacity needs. Greater involvement at the state level could lead to more realistic demand projections and better cost control.

Renewables Seen As A Cost-Effective Solution

Clean energy is being highlighted as a major opportunity to lower electricity costs. Solar and wind power have become increasingly affordable and can significantly reduce the average cost of power supply when integrated properly. A balanced energy mix that includes cheaper renewables can help utilities manage costs more effectively.

Despite this, many power distribution companies have been hesitant to sign long-term clean energy contracts. Instead, they have continued to depend heavily on coal-based power, which is often more expensive. As a result, nearly 45 gigawatts of clean energy capacity remains unsold, waiting for buyers.

Transmission Costs Add To Power Prices

Another factor pushing up electricity prices is the rising cost of inter-state power transmission. These charges increase the final cost of electricity supplied to consumers. The government is reviewing the current system, including the waivers offered on transmission charges for certain projects.

At present, electricity storage projects enjoy a complete waiver on inter-state transmission charges until June 2028. However, there are indications that such waivers may be reconsidered in the future as transmission costs continue to climb.

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Conclusion

India’s push to reduce power supply costs reflects a broader effort to support economic growth and ease pressure on consumers. Better coal sourcing, timely capacity planning, and wider adoption of renewables could play a crucial role in achieving this goal. While challenges remain, especially around clean energy adoption and transmission costs, a more efficient power sector could lead to more affordable electricity in the years ahead.

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