Power sector reforms and technology adoption in the Indian electricity distribution sector

Abstract

More than two decades since the reform process was introduced in the Indian power sector, distribution losses are still higher than the desirable levels, and continue to pose challenges for the viability of the entire sector. Adoption of loss reduction technologies (LRTs) is crucial to address high distribution losses and, improve quality and reliability of supply. These, in turn, can raise consumer satisfaction and can also help distribution utilities in improving their financial performance. Although power sector reforms, implemented through a number of policy and regulatory initiatives, emphasize distribution performance improvement, LRT adoption by distribution utilities has generally remained limited. Conceptualizing technology adoption and reforms from a new institutional economics perspective, this paper provides a systematic approach for identification and classification of barriers to LRT adoption to guide future distribution reforms. Based on a literature review and stakeholders’ survey, thirteen barriers are identified and classified at three levels of governance – sector, utility and sector-consumer interaction. Further, the Analytical Hierarchy Process (AHP) is used to rank the barriers. Results suggest that future reforms should focus on the improvement in utility-level governance, unlike the present focus on sector-level governance.