India should cut thermal power dependence: Govt panel

An Indian government panel has recommended lowering the country's reliance on thermal power over the next five years as part of a $1.4 trillion infrastructure spending plan.

The energy sector is proposed to account for as much as 24pc of the planned investment to be made by central and state governments and the private sector, with the power sector projected to get a large share of this, according to the panel's report that was released by India's finance ministry.

The panel forecast that India's installed electricity generation capacity will rise to 619GW by the financial year ending March 2025, up from 365.98GW now.

Thermal power generation capacity — which includes coal, natural gas, lignite and diesel-fired power plants — is projected to make up just 50pc of the total installed power generation mix by March 2025.

Thermal power currently accounts for 62.7pc of the country's installed capacity, which is dominated by coal.

Coal-fired electricity generation fell from a year earlier in December, amid an overall drop in power demand and stronger generation from sources such as hydropower. The weaker coal-fired electricity generation last month extended a trend of annual falls posted each month since August.

A key part of the plan is expanding electricity generation from renewable energy sources such as solar and wind. The proportion of installed power capacity based on renewable sources is expected to increase to 39pc from 23pc over the five-year period.

Some of the proposed investment will also go towards reforming debt-laden state-owned electricity distributors, dozens of which are operating at losses because of legacy issues related mainly to an inability to increase electricity tariffs.

These losses are likely to fall as the electricity distributors are expected to undertake a series of measures such as enhancing public-private-partnerships, regular tariff revisions and smart metering, the report said.

The proposal to seek more private-sector involvement fits with a move to attract investors to India's coal sector, as the government prepares to auction coal blocks for commercial mining.

The spending plan is part of prime minister Narendra Modi's push to propel the country's sagging economic growth. Providing round-the-clock electricity to all and promoting clean energy are central to his reform agenda.

By Saurabh Chaturvedi