Electricity is surplus but no respite from ‘power cuts’. Here’s why
From power deficit leading to hours of power cuts especially during summers, India, for the first time in history, will have excess electricity of 3.1% in peak hours and 1.1% during non-peak hours from June onwards, says a report released by the Central Electricity Authority (CEA).
But this does not mean uninterrupted electricity across the country through the year.
While the northern and northeastern regions continue to have electricity shortages, the western, southern and eastern parts of the country are sitting on surplus.
A peep into the government’s electricity tracking app, Vidyut Pravah shows a surplus of over 1,459 MW available at ` 2.64 per unit, on Monday afternoon.
But states with an electricity supply deficit are not buying this power. Experts point out that to cut losses many of these discoms disconnect electricity for hours. This situation is rampant in states where discoms do not have the money to buy electricity to meet the demand.
Salil Garg, director of corporate ratings at India Ratings explains the financial situation of SEBs (state electricity boards): “Demand is a function of the state discoms ability to buy power. So technically there is surplus but vast stretches of India would still be facing power cuts”
But other observers of the sector believe that its a case of demand-supply mismatch. “Demand for electricity has crashed, so we cannot say we are power surplus. The slowing demand in the power sector is making it difficult for generation and transmission companies to survive,” says Harry Dhaul, director general of IPPAI, an association of private power generation companies. “The decline varies from 10-40% from state to state,” added Dhaul.
Data from NTPC shows that demand for coal-based power has been 37.7 billion units lower in 2015-16 than the previous year, while for gas-based power it was lower by 25.5 billion units. Meanwhile, the state-run power generator added 2,200 MW capacity in 2015-16 against 1,290 MW in the previous fiscal.
“Overall slowdown in the economy and the lack of financial capacity of SEBs to buy electricity is the reason for muted demand. Manufacturing and mining sectors are also yet to pick up. Both these sectors are the main electricity guzzlers” said Madan Sabnavis, chief economist, Care Ratings.