#dnaEdit: Utilising idle power

The NDA government’s claims of a turnaround in the economy are belied by the low demand for electricity in the spot markets and the shutdown of as many as 57 thermal power plants across the country. Spot prices have fallen to Rs2.55 per unit(kWH) now against the record highs of Rs6 per unit in August. For some months now, bids for selling power at IEX, the country’s largest energy exchange, have significantly outpaced bids for buying power. The peak daily demand on May 23 at 1.34 lakh MW was just half of India’s total installed capacity of 2.68 lakh MW. It is unacceptable that so much installed capacity would lie unused in mid-summer when domestic demand is at its peak and many parts of the country are reeling from power outages. Besides the 57 plants shut due to lack of demand, there are 30 other thermal plants that have gone offline because of minor technical problems, which the developers are not showing any urgency in repairing.

It must be noted that the power sector is no more saddled with fuel shortages, neither coal and gas, as was happening in recent years after Coal India could not meet domestic coal requirements and the output of gas from KG Basin declined. Flaunting his ministry’s achievements, Union power minister Piyush Goyal noted that coal production had increased by 8.4 per cent, coal supply to power plants was up by 10 per cent, energy deficit was down to a historic low of 3.6 per cent, and power generation was up 8.5 per cent. In the past one year, nearly 10,000 MW of installed capacity has been added, which is nearly half the capacity of 20,950 MW added during the entire Tenth Five Year Plan(2002-2007). However, Goyal has chosen to blame the states for the flat power demand. Compared to the condition today, when half the vastly-improved installed capacity is lying unused, power plants were operating at 78 per cent capacity just three years ago. While the power sector cannot help if industrial demand is low, this puts the onus on the central and state governments to agree on power sector reforms that will resolve several systemic flaws and boost electricity demand in other ways.

The 2011 Census reveals that 82.4 per cent of Bihar households, 61.9 per cent of UP households, and 31.4 per cent of all households across India, translating to 8 crore households, still use kerosene as the main source of lighting. This reveals that adequate electricity to power lights, fans, coolers and heaters is not yet available to the poorer parts. Despite the surplus power availability, many states are refraining from buying power. Many state-owned power distribution companies are in poor financial health due to high fuel costs of the past, transmission losses, power theft and difficulties in bill collection. Such discoms prefer to shed load rather than ensure uninterrupted power supply for their consumers. Power-starved states like Tamil Nadu and Kerala are forced to purchase at rates of Rs8-10 per unit because of inadequate grid connectivity with the South. The Centre should expedite the work on the three transmission corridors that will allow south India to import nearly 12,000 MW of power from the other regions where thermal plants have unused capacity. 

The proposed power sector reforms that will allow consumers to choose their service provider from multiple discoms could act as a disincentive against load shedding. There is renewed emphasis on rural electrification, for which Rs43,000 crore has been allocated, and Rs32,612 crore has been allocated for strengthening sub-transmission and distribution network in the urban areas. Without improving service delivery, the build-up of idle power capacity due to industrial slump, could push power producers into debt and undermine the gains made by the sector in recent years.