Government targets two trillion units electricity output by 2020

The government has set a target of doubling electricity generation from 1 trillion units to 2 trillion units, Power Minister Piyush Goyal said Saturday, a day after the government tabled in the Lok Sabha amendments to the Electricity Act, 2003, initiating the second phase of reforms in the power sector.

"The government is aiming at 2 trillion units of electricity generation by 2020," Goyal told the Federation of Indian Chambers of Commerce and Industry's (Ficci) annual general meeting here.

"There will be a renewed focus on renewables, with generation going up from the current 53 billion units to 300 billion units in five years," said Goyal, who is also minister for coal and new and renewable energy.

The share of renewable energy is currently just over 5 percent of the total base made up of 1 trillion units of electricity.

Through the Electricity (Amendment) Bill, 2014 tabled Friday, the government proposes to introduce stricter penalties for failing to meet renewable purchase obligation (RPO) targets.

Under the RPO system, the state power distribution companies have to mandatorily purchase electricity generated through renewable energy sources during the year.

The proposed changes will also introduce the renewable generation obligation (RGO), which will make it compulsory for thermal power producers to generate electricity through renewables.

The amended Electricity Act will promote competition, efficiency and improvement in the supply of electricity in the country resulting in capacity addition and benefit to the consumers, Goyal said while introducing the bill in the lower house.

The salient changes proposed are aimed at enhancing grid safety, unbundling the distribution sector, promoting renewable energy and tariff rationalisation, the minister said.

Within a given area, multiple distribution companies would be licensed to operate and offer power to consumers.

"To achieve efficiency and for giving choice to consumers through competition, the concept of multiple supply licensees is proposed by segregating the carriage from content in the distribution sector, while continuing with the carriage (distribution network) as a regulated activity," the power ministry said in a statement.

While there will be a government distributor to ensure that power is provided to financially weaker sections, competition and a private sector role is proposed through these changes.

On rationalising tariffs, the bill envisages timely filing of tariff petitions by utilities and their disposal by the concerned regulator.