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The hype around renewable energy vis-a-vis the anomalies of Indian power sector
The hype around renewable energy and power surplus country in contrast to underutilized thermal capacity and financially weak power distribution companies (Discoms) underlines the anomalies of Indian power sector.

The country is expected to become power surplus as the all-India 'power deficit' has been easing. The country has got surplus capacity but with inefficient operation and clubbing the hype of solar, we are virtually killing the entire power sector. There is power generation capacity but there is no surplus demand for power.

The finances of state power distribution companies (Discoms) have not improved despite an improvement in coal availability, restructuring of distribution companies' debt through UDAI scheme and operationalisation of stuck projects. The state sector thermal power plants have been put on forced outage due to so called no demand because of forced one sided power purchase agreements with private generators. The Discoms face a precarious situation as they cannot service their cost and hence can't buy surplus power available.

The continued investment being made in solar sector with subsidy and incentives from the government has almost dried up the investment in thermal sector which is not good for the country in the long run. The solar power rates have come down only where a power purchase agreement has been signed guaranteeing timely and complete security system, free land availability and assured evacuation of power meaning all his risks have been covered by the Discoms. The power from renewable cannot be adjusted as per grid requirements so there must be equal addition of thermal and hydro power.

The plant load factor (PLF) of thermal plants has come down to a new low and government claims that it will further come down after the commissioning of new solar plants in next few years. The state sector thermal units with capacity up to 250 MW will become redundant in near future. The whole purpose of government seems to privatize the power sector completely. It is simply following the policy of privatizing the profits and nationalizing the losses.

Government has claimed that the power deficit has come down to 2.1 per cent in 2015-16. While this is good news, but it is not totally correct. While calculating power demand of the country, only people who are connected to the grid and have access to electricity at present are taken into consideration. The real demand that encompasses all citizens would be known only when India achieves universal energy access.

Claim of power surplus data show the extent to which power supply falls short of the demand by those connected to the grid. 'Connected' is the word to watch out for. It is these limited hours of supply that are taken into account while calculating the power requirement of agricultural consumers and rural areas to arrive at the overall deficit or surplus. The deficit is only capturing the unmet demand of the people connected to the grid. However, people who are yet to be connected and those with poor supply quality are not being taken into account. In an absolute sense, by which the availability of 24x7 power supply to all can be guaranteed is a distant dream.

With nearly six crore rural households, comprising a third of rural households, not having an electricity connection, the reported numbers under-estimate the country's real demand for electricity. Similarly many urban households, too, have no electricity connection. Also, the supply of electricity to farmers which is subsidised or free is limited to 4 to 8 hours every day.

India's per capita energy consumption of 1070 units is almost one-third the global average of 3026 units, and trails far behind the mean figure for the developed world. Although per capita energy consumption has more than doubled over the past 15 years, almost 240 million people do not have access to affordable energy supply today.

It is even worse for the rural UP, Bihar, MP and Jharkhand. As many as 87 per cent of rural households in Bihar, 71 per cent in UP, 45 per cent in MP and 63 per cent in Jharkhand have no electricity connection. Houses in urban areas also have no electricity connection. The urban households without electricity are 19 per cent in UP, 33 per cent in Bihar, 12 per cent in Jharkhand & 7 per cent in MP.

On the contrary there are, however, some states such as Gujarat and Maharashtra where the access to power is almost universal. Some states like Punjab, Haryana, Gujarat, Maharashtra, have signed more than required power purchase agreements with private power generators due to which state run thermal power plants are on forced outages while states like UP and Bihar are facing load shedding. Majority of the states are still power deficit. Discoms are not in such a financial position to embrace more financial liabilities in their efforts for ensuring interrupted power supply.

It is a fact that the state Discoms of the country as a whole are in poor financial health with accumulated debt and losses of the previous years. The Government has introduced the UDAY Scheme by which the state governments would own the responsibility to improve financial condition of the state Discoms and to start with taking over of the outstanding debts of the Discoms in a phased and time bound manner. By operational and financial turnaround of Discoms, government expects to facilitate reliable, adequate and sufficient power supply to consumers, among other things. Even with this step, it would take several years for achieving financial turn-around of the state power sector and no one can assure of actual turnaround of Discoms. The earlier two financial restructuring programmes of the government have completely failed.

Most of the states are having the problem of stranded capacity of power stations in the state including central sector and private sector. The situation is wide spread wherein private sector plants are operated in preference while central sector plants are not fully scheduled and also state thermal stations are being kept shut down. The state run thermal plants are seeing lowest plant load factor and idle coal stocks.

Another major hurdle in power sector reforms is that after the new government took over, power sector appointments are seeing major blocks. Most of the regulatory posts are vacant and chairmen of almost all regulatory commissions are retired bureaucrats. The Electricity Act, 2003, was intended to bring in independent oversight put paid to politically mandated tariffs and gross populism in power. But it has now been shown that state power regulators may not revise tariffs for years, to remain in the good books of the powers that be. Even in state utilities technocrats have been sidelined and are not part of decision making management.

Under these circumstances, the step to further amend the Electricity Act 2003 for introducing the concept of supply licensee so as to separate out carriage and content would further deteriorate the already stressed power sector.

Electricity Act 2003 was enacted for restoring the financial health of power sector but this has failed to achieve its objective. Without analyzing the causes and circumstances of failure to achieve its objective, the government should not go for another experiment.

Vinod Kumar Gupta, Spokesperson, All India Power Engineers Federation

Editorial NOTE: This article is categorized under Opinion Section. The views expressed in this article are solely those of the author and do not necessarily represent the views of In case you have a opposing view, please click here to share the same in the comments section.
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