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Learning Journal-3: Submitted by - DHANEESH K Date: 24.04.2024

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DHANEESH K
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16 views

Learning Journal-3: Submitted by - DHANEESH K Date: 24.04.2024

Uploaded by

DHANEESH K
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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LEARNING JOURNAL- 3

Electricity sector reforms aim to modernize the way electricity is produced, distributed,
and priced to improve efficiency, reduce costs, attract investment, address environmental
concerns, and promote cleaner energy sources. A significant model for these reforms, the
'standard Textbook Model,' was first introduced in Chile and later adopted in other energy sectors
worldwide. This model focuses on deregulation, changing industry structures, ownership
arrangements, and introducing competition.

Before reforms, many electricity sectors were vertically integrated, meaning one entity
managed generation, transmission, and distribution. However, reforms like the Electricity Act of
2003 led to unbundling, where generation became unlicensed, and a single buyer model
emerged, with a purchasing agency procuring electricity from various generators.

An example of these reforms is seen in Gridco (Odisha Power Transmission Corporation)


in India, where transmission was separated, but Gridco retained control over purchasing and
selling electricity. Despite aiming for efficiency improvements and cost reductions, Discoms in
Odisha had limited options, leading to minimal progress in their financial health and efficiency.

While some states in India have implemented partial reforms, such as functional
unbundling, full ownership unbundling, where each sector is separately owned and managed,
remains uncommon. This model aims to reduce political influence and increase efficiency.
Currently, no state electricity board in India fully follows private ownership unbundling, unlike
countries like the UK and Japan.

Policy interventions are crucial to address challenges such as AT&C losses, reliability
issues, and Discom financial stress. A combination of operational, financial, and managerial
interventions, including grid modernization, renewable energy integration, Discom restructuring,
tariff rationalization, and smart metering, can tackle these issues. However, there's no one-size-
fits-all solution, and policies must be tailored to each state's challenges.

Initiatives like the Integrated Power Development Scheme (IPDS) and the Revamped
Distribution Sector Scheme (RDSS) have shown promise in reducing AT&C losses and
improving infrastructure, but challenges like high Discom debt persist. RDSS aims to bridge the
gap between costs and revenues and reduce AT&C losses further.

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Submitted by – DHANEESH K Date: 24.04.2024
In conclusion, the journey of electricity sector reforms reflects a dynamic landscape of
challenges, interventions, and aspirations for a more efficient, sustainable, and accessible
energy future. The shift from traditional vertically integrated models to more diversified and
competitive structures has been driven by the need for efficiency, cost-effectiveness, and
environmental sustainability. However, the path to reform has been marked by both successes
and setbacks, highlighting the complexity of the task at hand. Moreover, a holistic approach that
considers social, economic, and environmental dimensions will be essential to achieve
sustainable energy transitions and fulfill India's commitment to equitable and inclusive
development. By leveraging the lessons learned from past experiences and embracing a
forward-looking mindset, the electricity sector can pave the way for a brighter and more resilient
energy future for generations to come.

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Submitted by – DHANEESH K Date: 24.04.2024

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