What states can do to avoid disruptions in power supply
Discussion on the recent power shortage in some states has confounded understanding on this critical issue and generated three myths: One, this is only a supply side crisis; two, that increased electricity consumption is a perennial phenomenon; and three, that the remedy lies with the central government. To bust these misconceptions, it is important to revisit the fundamentals of the power sector in India before any causal analysis.
India has the world’s third largest electricity installed capacity, about 400 GW, after China and the United States (US). This is 60% more than the installed capacity of the country in 2014. On April 19, the highest demand was 207 GW with 8 GW of peak shortage. So, why could a capacity of 400 GW not meet the demand? Because unlike other goods, electricity is a flow (nonstorable) commodity, not a stock commodity. It has to be pre-scheduled for the next day both by generators (gencos) and consumers (discoms). Hence, the composition of both supply and demand sides needs to be analysed.
Fuel-wise, 53% of the capacity in India is coal-based, 27% is renewable, 6% is gasbased, 12 % is hydro and 2% is nuclear. Hence, besides coal, the availability of solar, wind, gas, water and nuclear power plants is also crucial. To understand the supply scenario, let us compare a day’s supply this year to one last year. On May 2, 2021, coal, renewable, hydro, nuclear and gas power plants supplied 2949 MU, 314 MU, 299 MU, 113MU and 113 MU, respectively. On May 2, 2022, these figures were 3418 MU, 624 MU, 388 MU, 104 MU and 88 MU respectively. Thus, coal-based generation went up 16%, renewable generation almost doubled, hydel and nuclear generation remained the same but gas-based power generation shrank by 28%. Overall, 22% more electricity is available this year, compared to last year. So, the popular “short-supply” argument is not tenable.
Let us look at the demand side. With economic recovery, India’s electricity demand also picked up. For the week ending April 24, the states facing the peak power shortages were Uttar Pradesh (867 MW), Haryana (445 MW), Rajasthan (404MW), Andhra Pradesh (300MW) and Jammu & Kashmir (131MW). It is not a coincidence that these five states have either the maximum aggregate technical and commercial losses (Uday portal) or the maximum outstanding discom dues (PRAAPTI portal). Thus, states where the power sector is financially in the red face peak power shortage. This translates into power outages and hardships faced by the people and businesses of that state.
Another aspect of the story is that most of the demand comes from the northern region of the national grid, whereas most industrialised states are connected to the western and southern region. It is highly likely that most of this electricity demand is coming from airconditioning plugged in to deal with the scorching summer heat. Thus, contrary to popular belief, the increased demand is not perennial. Real time granular data would help policymakers ascertain if the spurt in electricity demand is coming from the high-contribution sector of the economy (manufacturing, services) or from the low contribution sectors (personal air-conditioners).
Power shortage is more a demand side problem aggravated by poor distribution infrastructure in the states. It is unrealistic to expect the remedy from the central government alone. Out of 400 GW, only about 100 GW is in the central sector and the rest is in the private sector (200 GW) and state sector (100 GW). States can take three shortterm measures to ensure uninterrupted power supply: One, clear the dues of gencos so that load dispatch centres are able to schedule power supply, two, improve demand management by accurately forecasting demand and prioritising the sectors, and third, invest in distribution infrastructure such as transformers and cables so that failures and losses during peak summer are minimised.
Rajesh Gupta is director, NITI Aayog The views expressed are personal