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NEW DELHI : The Union government plans to provide viability gap funding (VGF) or grants for offshore wind and storage projects, Union power and new and renewable energy minister Raj Kumar Singh said on Thursday.

A grant is also being explored for green hydrogen in heavy mobility. Singh was briefing reporters after a meeting with state energy ministers on the new reforms-linked distribution sector scheme. VGF can provide a push to India’s infrastructure-creation plans through public-private partnerships.

This assumes significance given that the Union ministry of new and renewable energy (MNRE) has set a target of adding 30 gigawatts (GW) of offshore wind energy projects by 2030. India plans to leverage scale to lower offshore energy tariffs by harnessing the enormous wind power potential along its 7,600-km coastline.

In addition to plans for calling for bids for setting up a 13-gigawatt hour (GWh) grid-scale battery storage system in Ladakh, the Union government also plans to set up a 14 GWh grid-scale battery storage system at the world’s largest renewable energy park at Khavda in Kutch, Gujarat. Several other grid-scale battery storage projects are in the works.

India’s demand for electricity is growing, which denotes a healthy growth of economy, Singh said. Electricity demand was 124 billion units in August, compared to 106 billion units in the corresponding month of 2019, before the coronavirus outbreak hit demand.

In a reflection of revival of economic activity, India’s peak electricity demand recorded an all-time high of 200.57GW on 7 July.

“Our demand is increasing because of the economy improving and more households are getting electricity," Singh said.

This comes against the backdrop of the government working on the marquee 3.03 trillion power distribution company (discom) reform scheme, wherein the Centre’s share will be 97,631 crore. The reforms-based result-linked power distribution sector scheme, which will applicable till 2025-26, was announced in the Union budget this year and will subsume programmes such as the Integrated Power Development Scheme and the Deen Dayal Upadhyaya Gram Jyoti Yojana.

“Singh underlined to the ministers that the increasing demand for electricity has necessitated the strengthening and modernization of the distribution infrastructure. He informed them that the scheme has been designed as a bottom-up scheme and the discoms/states are empowered to prepare their own DPRs (detailed project reports) based on their need assessments prioritizing the loss reduction works. Modernization works such as system augmentation, renovation and modernization of substations, can also be carried out by the discoms under this scheme, he pointed out," the Union power ministry said.

The funds will be released to discoms subject to them meeting reform-related milestones, with state-run Power Finance Corporation Limited and Rural Electrification Corporation Limited nominated as the nodal agencies for the scheme’s implementation. With the scheme being a conditional one, the discoms will only be able to access it once they work on their plans and meet targets.

“The Union minister advised that the plan should address the weaknesses in the system and should take into account the increasing demands. He stated that the plan should take into account what the demand will be 10 years down the line and prepare the system to meet that. He also stated that the system needed to be modernized. The Union minister of power also stated that he and his officers will also meet the states and sit with the state energy ministers and officers to help them draw up their plan," it said.

The ambitious scheme aims to bring down India’s average aggregate technical and commercial loss from the present level of 21.4%, to 12-15% and gradually narrow the deficit between the cost of electricity and the price at which it is supplied to ‘zero’ by 2024-25. The reforms are also aimed at improving the reliability and quality of power supply.

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