The response to this challenge by the discoms has been regressive to a large extent in our view. Discoms have cancelled auctions that resulted in already low-cost renewables to strike deals at even lower prices. In some cases, PPAs have been cancelled or forced to be negotiated to bring tariffs lower than the signed PPAs. This has significantly derailed India’s near-term target of 175GW of renewable energy capacity by FY2021/22; the renewables capacity stood at about 100GW as of July 2021.
India’s state-owned power distribution sector has been a troubled segment of India’s power sector value chain for more than a decade now. The key reasons behind discoms’ ailing financial health have included high technical and commercial losses; high power procurement costs; state-imposed crosssubsidy burdens on tariffs; and other operational inefficiencies. Identifying all of these weaknesses in discoms’ operational and financial structure in our report ‘The Curious Case of India’s Discoms’ from August 2020,1 IEEFA had recommended a national pooling of electricity market resources for optimising India’s power generation resources.