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India likely to take five more years to move towards grid parity- Pramod Deo, CERC

According to reports, grid failure, fuel supply shortage, and a first of its kind tariff review petition are some of the major issues that the power sector is facing today.

At the centre of all this is the Central Electricity Regulatory Commission (CERC), which is trying to find a solution so that the country has a healthy and competitive power sector.

In an interaction with Business Line, Pramod Deo, Chairperson and Chief Executive of CERC, shares his views on these issues. Excerpts from the interview:

…..Is the country ready for varied tariff?

Distribution companies buy power from various sources and then it is pooled. There are some old plants where tariffs are low. But, electricity from new plants is expensive. Now, it is also mandatory for them to buy power from the renewable sector. The higher cost is now passed on to the customer.

The question (that needs tackling) is, solar (pricing). When we did it on cost plus basis, it was very high, up to Rs 17 a unit. Now, it has come down to Rs 7-8 a unit in reverse competitive bidding.

In phase-I of the solar mission, the burden would be high. This will not be possible in phase-II. So, the Centre has to decide on how the subsidy mechanism is worked out till grid parity is attained.

When do you think grid parity will be attained?

I think it will take five years to move towards grid parity. Much also depends on what happens to fossil fuels. Their prices are also going up with no chances of decline likely. China continues to grow, so does India, and both are major buyers. There is a cross-subsidy mechanism that would continue.

What about the possibility of open access?

Unless power is available in abundance and at cheaper rates, open access is not possible. I put the number at Rs 3 a unit or below. And the cross-subsidy, wheeling and stand-by charges would cost another Rs 1.50 a unit. Also, there must be an assurance of supply. But, where is the power available today?

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